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PRIOR PRINTER'S NOS. 2043, 3677, 3708,
3709 PRINTER'S NO. 3745
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1667
Session of
2025
INTRODUCED BY TAKAC, SANCHEZ, HILL-EVANS, GUZMAN, SAMUELSON,
MAYES, D. WILLIAMS, NEILSON, WEBSTER, GREEN AND MADSEN,
JUNE 26, 2025
AMENDMENTS TO SENATE AMENDMENTS, HOUSE OF REPRESENTATIVES,
JULY 1, 2026
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in sales and use tax, further providing for
exclusions from tax; in gross receipts tax, further providing
for imposition of tax and for establishment of revenue-
neutral reconciliation; providing for educational tax
credits; in manufacturing and investment tax credit, further
providing for business firms and for tax credit certificates;
repealing provisions relating to Computer Data Center
Equipment Incentive Program; in general provisions, providing
for data centers; prohibiting the imposition of a tax on
gross receipts received from the sale of electric energy;
imposing a penalty; and making repeals.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 204(58) of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971, is amended
and the section is amended by adding a clause to read:
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Section 204. Exclusions from Tax.--The tax imposed by
section 202 shall not be imposed upon any of the following:
* * *
(58) The sale at retail or use of a personal computer, a
tablet, a personal digital assistant, a peripheral device or an
Internet access device, or a service contract or single-user
licensed software purchased in conjunction with a personal
computer, tablet, personal digital assistant, peripheral device
or Internet access device, with a sales price of not more than
one thousand five hundred dollars ($1,500), during the exclusion
period by an individual purchaser for nonbusiness use. The
exclusion does not include a sale at retail or use of, leasing,
rental or repair of a personal computer, tablet, personal
digital assistant, peripheral device or Internet access device;
mainframe computers; network servers; local area network hubs;
routers and network cabling; network operating systems;
multiple-user licensed software; minicomputers; [hand-held
computers; personal digital assistants without Internet access;]
hardware word processors; graphical calculators; video game
consoles; telephones; digital cameras; pagers; compact discs
encoded with music or movies; and digital versatile discs
encoded with music or movies. For purposes of this clause, the
phrase "exclusion period" means the period of time from [August
5, 2001, to and including August 12, 2001, and from February 17,
2002, to and including February 24, 2002.] the first Saturday in
August to and including the third Saturday in August. For
purposes of this clause, "purchaser" means an individual who
places an order and pays the purchase price by cash or credit
during the exclusion period even if delivery takes place after
the exclusion period.
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* * *
(77) The sale at retail or use of school supplies during the
exclusion period for nonbusiness purposes. For the purposes of
this clause:
(i) The following terms or phrases shall have the following
meanings:
"Art supplies" shall mean clay and glazes, paints,
paintbrushes, sketch and drawing pads and watercolors.
"Exclusion period" shall mean the first Saturday in August to
and including the third Saturday in August.
"Instructional materials" shall mean reference books,
reference maps and globes, textbooks and workbooks.
"School supplies" shall mean items such as book bags, pens,
pencils, pencil sharpeners, markers, highlighters, erasers,
crayons, blackboard chalk, notebooks, binders, folders, paper,
index cards, glue, tape, rulers, scissors, staplers, staples,
paper clips, printer ink, calculators, compasses, protractors,
lunch boxes, school supply boxes, personal organizers, art
supplies, clipboards, dry erase markers, sticky notes, bulletin
board paper, educational posters and games and instructional
materials with a sales price of fifty dollars ($50) or less per
item.
(ii) The department may promulgate regulations to include
other similar items in the definitions of "art supplies,"
"instructional materials" and "school supplies" under this
clause.
Section 1.1. Section 1101(b) and (h) of the act are amended
and the section is amended by adding a subsection to read:
Section 1101. Imposition of Tax.--* * *
(a.2) Transfer to Alternative Fuels Incentive Fund.--
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Notwithstanding any other provision of law, beginning in fiscal
year 2026-2027, and each fiscal year thereafter, seven million
dollars ($7,000,000) of the taxes received under subsection (a)
shall be transferred to the Alternative Fuels Incentive Fund
established under section 3 of the act of November 29, 2004
(P.L.1376, No.178), known as the Alternative Fuels Incentive
Act. The transfer required under this subsection shall be made
annually by May 31, 2027, and each May 31 thereafter.
(b) Electric Light, Waterpower and Hydro-electric
Utilities.--
(1) Every electric light company, waterpower company and
hydro-electric company now or hereafter incorporated or
organized by or under any law of this Commonwealth, or now or
hereafter organized or incorporated by any other state or by the
United States or any foreign government and doing business in
this Commonwealth, and every limited partnership, association,
joint-stock association, copartnership, person or persons,
engaged in electric light and power business, waterpower
business and hydro-electric business in this Commonwealth, shall
pay to the State Treasurer, through the Department of Revenue, a
tax of forty-four mills upon each dollar of the gross receipts
of the corporation, company or association, limited partnership,
joint-stock association, copartnership, person or persons,
received from:
[(1)] (i) the sales of electric energy within this State,
except gross receipts derived from the sales for resale of
electric energy to persons, partnerships, associations,
corporations or political subdivisions subject to the tax
imposed by this subsection upon gross receipts derived from such
resale; and
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[(2)] (ii) the sales of electric energy produced in
Pennsylvania and made outside of Pennsylvania in a state that
has taken action since December 21, 1977 which results in higher
costs for electric energy produced in that state and sold in
Pennsylvania unless the action that was taken after December 21,
1977 is rescinded according to the following apportionment
formula: except for gross receipts derived from sales under
clause (1), the gross receipts from all sales of electricity of
the producer shall be apportioned to the Commonwealth of
Pennsylvania by the ratio of the producer's operating and
maintenance expenses in Pennsylvania and depreciation
attributable to property in Pennsylvania to the producer's total
operating and maintenance expenses and depreciation.
(2) This subsection shall expire July 1, 2026.
* * *
(h) Benefits to Consumer.--
(1) For purposes of this article, the reduction in the taxes
imposed under subsections (a) and (b) shall derive to the
benefit of the consumer purchasing services from said utilities.
Said benefit shall be provided in the form of a reduction in the
State tax surcharge. Failure to pass through the reduction to
the consumer shall subject the public utility to a civil penalty
of at least one thousand dollars ($1,000), but not more than
five thousand dollars ($5,000), and such additional relief as
the court may deem appropriate.
(2) For purposes of this article, the elimination of the
taxes imposed under subsection (b) shall derive to the benefit
of the consumer purchasing electric energy. The benefit shall be
provided in the form of the elimination of or a reduction in the
State tax surcharge. Failure to pass through the elimination or
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reduction to the consumer shall subject the entity to a civil
penalty of at least one thousand dollars ($1,000), but not more
than five thousand dollars ($5,000), and additional relief as
the court may deem appropriate.
* * *
Section 2. Section 1101.2 of the act is amended to read:
Section 1101.2. Establishment of Revenue-Neutral
Reconciliation.--(a) Notwithstanding the provisions of 66
Pa.C.S. § 2810(c)(1) (relating to revenue-neutral
reconciliation), the rate of tax established under 66 Pa.C.S. §
2810(c)(2) for the period beginning January 1, 2002, shall
continue in force without further adjustment for periods
beginning January 1, 2003, and thereafter, and the Secretary of
Revenue shall not deliver any further reports under 66 Pa.C.S. §
2810(c)(3).
(b) Subsection (a) shall expire July 1, 2026.
Section 3. The act is amended by adding an article to read:
ARTICLE XVII-F
EDUCATIONAL TAX CREDITS
Section 1701-F. Scope of article.
This article establishes the educational improvement and
opportunity scholarship tax credits.
Section 1702-F. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Applicable taxes." Any of the taxes due under Article III,
IV, VI, VII, VIII, IX, XV or XX or a tax under Article XVI of
the act of May 17, 1921 (P.L.682, No.284), known as The
Insurance Company Law of 1921.
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"Applicant." An eligible student who applies for a
scholarship.
"Assessment." The Pennsylvania System of School Assessment
test, the Keystone Exam, an equivalent local assessment or
another test established or approved by the State Board of
Education or the General Assembly to meet the requirements of
section 2603-B(d)(10)(i) of the Public School Code of 1949 , or
required under the Every Student Succeeds Act (Public Law 114-
95, 129 Stat. 1802) or its successor statute or another test
required to achieve other standards established by the
Department of Education for the public school or school district
under 22 Pa. Code § 403.3 (relating to single accountability
system).
"Attendance boundary." A geographic area of residence used
by a school district to assign a student to a public school.
"Average daily membership." As defined in section 2501(3) of
the Public School Code of 1949.
"Business firm." An entity authorized to do business in this
Commonwealth and subject to taxes imposed under Article III, IV,
VI, VII, VIII, IX, XV or XX or a tax under Article XVI of The
Insurance Company Law of 1921. The term includes a pass-through
entity, including a pass-through entity, the purpose of which is
the making of contributions under this article and whose
shareholders, partners or members are composed of owners or
employes of other business firms.
"Career and technical school." A public secondary school
established under the provisions of Article XVIII of the Public
School Code of 1949.
"Contribution." A donation of cash, personal property or
services, the value of which is the net cost of the donation to
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the donor or the pro rata hourly wage, including benefits, of
the individual performing the services.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Economically disadvantaged school." Any school within this
Commonwealth at which at least 51% of the students attending the
school in the immediately preceding school year received a
scholarship pursuant to this article in the following amounts:
(1) for a pre-kindergarten, kindergarten or elementary
school, at least $500; and
(2) for a secondary school, at least $1,000.
"Educational improvement organization." A nonprofit entity
which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.); and
(2) contributes at least 90% of its annual receipts as
grants to a public school, a chartered school as defined in
section 1376.1 of the Public School Code of 1949, or a
private school approved under section 1376 of the Public
School Code of 1949, for innovative educational programs.
For purposes of this definition, a nonprofit entity
"contributes" its annual cash receipts when it expends or
otherwise irrevocably encumbers those funds for expenditure
during the then-current fiscal year of the nonprofit entity or
during the next succeeding fiscal year of the nonprofit entity.
A nonprofit entity shall include a school district foundation,
public school foundation, charter school foundation or cyber
charter school foundation.
"Elementary school." A school which is not a secondary
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school.
"Eligible pre-kindergarten student." A student, including an
eligible student with a disability, who is enrolled in a pre-
kindergarten program and is a member of a household with a
maximum annual household income as increased by the applicable
income allowance.
"Eligible student." A school-age student, including an
eligible student with a disability, who is enrolled in a school
and is a member of a household with a maximum annual household
income as increased by the applicable income allowance.
"Eligible student with a disability." A pre-kindergarten
student or a school-age student who meets all of the following:
(1) Is enrolled in a special education school or has
otherwise been identified, in accordance with 22 Pa. Code Ch.
14 (relating to special education services and programs), as
a "child with a disability," as defined in 34 CFR § 300.8
(relating to child with a disability).
(2) Needs special education and related services.
(3) Is enrolled in a pre-kindergarten program or in a
school.
(4) Is a member of a household with a household income
of not more than the maximum annual household income.
"Fiscal year." The Commonwealth's fiscal year beginning July
1 and ending June 30.
"Household." An individual living alone or with the
following: a spouse, parent and their unemancipated minor
children, other unemancipated minor children who are related by
blood or marriage or other adults or unemancipated minor
children living in the household who are dependent upon the
individual.
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"Household income." All money or property received of
whatever nature and from whatever source derived. The term does
not include the following:
(1) Periodic payments for sickness and disability other
than regular wages received during a period of sickness or
disability.
(2) Disability, retirement or other payments arising
under workers' compensation acts, occupational disease acts
and similar legislation by any government.
(3) Payments commonly recognized as old-age or
retirement benefits paid to persons retired from service
after reaching a specific age or after a stated period of
employment.
(4) Payments commonly known as public assistance or
unemployment compensation payments by a governmental agency.
(5) Payments to reimburse actual expenses.
(6) Payments made by employers or labor unions for
programs covering hospitalization, sickness, disability or
death, supplemental unemployment benefits, strike benefits,
Social Security and retirement.
(7) Compensation received by United States servicemen
serving in a combat zone.
(8) Payments received from a governmental agency to
relieve the economic effects of the COVID-19 pandemic.
"Income allowance." The base amount of $15,000 for each
eligible student, eligible pre-kindergarten student and
dependent member of the household. Beginning July 1, 2014, the
department shall annually adjust the base amount to reflect
upward changes in the Consumer Price Index for All Urban
Consumers for the Pennsylvania, New Jersey, Delaware and
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Maryland area for the preceding 12 months. The department shall
immediately transmit the adjusted amounts to the Legislative
Reference Bureau for publication as a notice in the next
available issue of the Pennsylvania Bulletin.
"Innovative educational program." An advanced academic or
similar program that is not part of the regular academic program
of a public school but that enhances the curriculum or academic
program of the public school, chartered school or private school
or provides pre-kindergarten programs to public school students,
students of a chartered school or students of a private school.
For the purposes of this definition, a chartered school shall
mean a chartered school as defined in section 1376.1 of the
Public School Code of 1949, and a private school shall mean a
private school approved under section 1376 of the Public School
Code of 1949.
"Kindergarten." A one-year formal educational program that
occurs during the school year immediately prior to first grade.
The term includes a part-time and a full-time program.
"Low-achieving school." A public school that ranked in the
lowest 15% of the school's designation as an elementary school
or a secondary school based on combined mathematics and reading
scores from the annual assessment administered in the previous
school year and for which the Department of Education has posted
results on the Department of Education's publicly accessible
Internet website. The term does not include a charter school,
cyber charter school or area career and technical school.
"Maximum annual household income."
(1) Subject to adjustment under paragraphs (2) and (3),
the amount of $90,000, plus the applicable income allowance.
(2) With respect to an eligible student with a
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disability, as calculated by multiplying:
(i) the applicable amount under paragraph (1); by
(ii) the applicable support level factor according
to the following table:
Support Level Support Level Factor
1 1.50
2 2.993
(3) Beginning July 1, 2014, the department shall
annually adjust the income amounts under paragraphs (1) and
(2) to reflect any upward changes in the Consumer Price Index
for All Urban Consumers for the Pennsylvania, New Jersey,
Delaware and Maryland area in the preceding 12 months and
shall immediately transmit the adjusted amounts to the
Legislative Reference Bureau for publication as a notice in
the next available issue of the Pennsylvania Bulletin.
"Nonpublic school." A school which is a nonprofit
organization and which is located in this Commonwealth. The term
does not include a public school.
"Opportunity scholarship." An award given to an applicant to
pay tuition and school-related fees necessary to attend a
participating nonpublic school or a participating public school
located in a school district which is not the recipient's school
district of residence.
"Opportunity scholarship organization." A nonprofit entity
which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.); and
(2) contributes at least 90% of the entity's annual cash
receipts to an opportunity scholarship program or at least
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85% of the annual cash receipts if the entity reports an
annual IRS program expense percentage of greater than 90% on
its IRS 990 tax filing.
For the purposes of this definition, a nonprofit entity
contributes the entity's cash receipts to an opportunity
scholarship program when the entity expends or otherwise
irrevocably encumbers those funds for distribution during the
then-current fiscal year of the nonprofit entity or during the
next succeeding fiscal year of the nonprofit entity.
"Opportunity scholarship program." A program to provide
opportunity scholarships to eligible students who reside within
the attendance area of a low-achieving school.
"Parent." An individual who:
(1) is a resident of this Commonwealth; and
(2) either:
(i) has legal custody or guardianship of a student;
or
(ii) keeps in the individual's home a student and
supports the student gratis as if the student were a
lineal descendant of the individual.
"Participating nonpublic school." A nonpublic school which
notifies the Department of Education under section 1711-F that
the school wishes to accept opportunity scholarship recipients.
"Participating public school." A public school in a school
district which notifies the Department of Education under
section 1711-F that the school wishes to accept opportunity
scholarship recipients. The term does not include a low-
achieving school.
"Pass-through entity." A partnership as defined in section
301(n.0), a single-member limited liability company treated as a
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disregarded entity for Federal income tax purposes or a
Pennsylvania S corporation as defined in section 301(n.1). The
term includes a pass-through entity that owns an interest in a
pass-through entity. The term also includes a qualified
Subchapter S trust.
"Pre-kindergarten program." A program of instruction for
three-year-old, four-year-old, five-year-old or six-year-old
students, other than a kindergarten, that utilizes a curriculum
aligned with the curriculum of the school with which it is
affiliated and which provides one of the following:
(1) A minimum of two hours of instructional and
developmental activities per day at least 60 days per school
year.
(2) A minimum of two hours of instructional and
developmental activities per day at least 20 days over the
summer recess.
"Pre-kindergarten scholarship organization." A nonprofit
entity which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 or is operated as a
separate segregated fund by a scholarship organization that
has been qualified under section 1703-F; and
(2) contributes at least 90% of its annual cash receipts
to a pre-kindergarten scholarship program by expending or
otherwise irrevocably encumbering those funds for
distribution during the then-current fiscal year of the
organization or during the next succeeding fiscal year of the
organization or at least 85% of the annual cash receipts if
the entity reports an annual IRS program expense percentage
of greater than 90% on its IRS 990 tax filing.
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"Pre-kindergarten scholarship program." A program to provide
tuition to eligible pre-kindergarten students to attend a pre-
kindergarten program operated by or in conjunction with a school
located in this Commonwealth and that includes an application
and review process for the purpose of making awards to eligible
pre-kindergarten students and awards scholarships to eligible
pre-kindergarten students without limiting availability to only
students of one school or one building within a school district
or nonpublic school entity.
"Public school." A public pre-kindergarten where compulsory
attendance requirements do not apply or a public kindergarten,
elementary school, secondary school or career and technical
school at which the compulsory attendance requirements of this
Commonwealth may be met and which meets the applicable
requirements of Title VI of the Civil Rights Act of 1964 (Public
Law 88-352, 78 Stat. 241).
"Public School Code of 1949." The act of March 10, 1949
(P.L.30, No.14), known as the Public School Code of 1949.
"Qualified Subchapter S trust." As defined in section
1361(d)(3) of the Internal Revenue Code of 1986.
"Recipient." An applicant who receives a scholarship.
"Scholarship." An award under a scholarship program to pay
tuition and school-related fees to attend a school.
"Scholarship organization." A nonprofit entity which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986; and
(2) contributes at least 90% of its annual cash receipts
to a scholarship program or at least 85% of the annual cash
receipts if the entity reports an annual IRS program expense
percentage of greater than 90% on its IRS 990 tax filing.
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For purposes of this definition, a nonprofit entity
"contributes" its annual cash receipts to a scholarship program
when it expends or otherwise irrevocably encumbers those funds
for distribution during the then-current fiscal year of the
nonprofit entity or during the next succeeding fiscal year of
the nonprofit entity.
"Scholarship program." A program to provide tuition and
school-related fees to eligible students to attend a school
located in this Commonwealth. A scholarship program must include
an application and review process for the purpose of making
awards to eligible students. The award of scholarships to
eligible students shall be made without limiting availability to
only students of one school or one building within a school
district or nonpublic school entity.
"School." A public or nonpublic pre-kindergarten,
kindergarten, elementary school or secondary school at which the
compulsory attendance requirements of the Commonwealth may be
met and which meets the applicable requirements of Title VI of
the Civil Rights Act of 1964.
"School age." Children from the earliest admission age to a
school's pre-kindergarten or kindergarten program or, when no
pre-kindergarten or kindergarten program is provided, the
school's earliest admission age for beginners, until the end of
the school year, the student attains 21 years of age or
graduation from high school, whichever occurs first.
"School district of residence." The school district in which
the student's primary domicile is located.
"School-related fees." Fees charged by a school to all
students for books, instructional materials, technology
equipment and services, uniforms, activities and concurrent
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enrollment programs under Article XVI-B of the Public School
Code of 1949.
"Secondary school." A school with an eleventh grade.
"Special education school." A school or program within a
school that is designated specifically and exclusively for
students with any of the disabilities listed in 34 CFR 300.8 and
meets one of the following:
(1) Is licensed under the act of January 28, 1988
(P.L.24, No.11), known as the Private Academic Schools Act.
(2) Is accredited by an accrediting association approved
by the State Board of Education.
(3) Is a school for the blind or deaf receiving
Commonwealth appropriations.
(4) Is operated by or under the authority of a bona fide
religious institution or by the Commonwealth or any political
subdivision thereof.
"Student." An individual who meets all of the following:
(1) Is school age.
(2) Is a resident of this Commonwealth.
(3) Attends or is about to attend a school.
"Support level." The level of support needed by an eligible
student with a disability, as set forth in the following matrix:
Support Level 1 - The student is not enrolled in a
special education school.
Support Level 2 - The student is enrolled as a student in
a special education school.
"Tax year." A taxpayer's annual accounting period or, if a
return is made for a period of less than 12 months, the period
for which the return is made.
Section 1703-F. Qualification and application by organizations.
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(a) Establishment.--In accordance with section 14 of Article
III of the Constitution of Pennsylvania, the educational
improvement and opportunity scholarship tax credit programs are
established to enhance the educational opportunities available
to all students in this Commonwealth.
(b) Information.--In order to qualify under this article, an
educational improvement organization, a scholarship
organization, a pre-kindergarten scholarship organization or an
opportunity scholarship organization must submit information to
the department that enables the department to confirm that the
organization is exempt from taxation under section 501(c)(3) of
the Internal Revenue Code of 1986.
(c) Scholarship organizations and pre-kindergarten
scholarship organizations.--A scholarship organization or pre-
kindergarten scholarship organization must certify to the
department that the organization is eligible to participate in
the educational improvement tax credit program established under
this article and must agree to annually report the following
information based on the immediately preceding fiscal year to
the department by November 1 of each year:
(1) For each fiscal year through the 2024-2025 fiscal
year:
(i) The number of scholarships awarded during the
immediately preceding school year to eligible pre-
kindergarten students.
(ii) The total and average amounts of the
scholarships awarded during the immediately preceding
school year to eligible pre-kindergarten students.
(iii) The number of scholarships awarded during the
immediately preceding school year to eligible students in
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grades kindergarten through eight.
(iv) The total and average amounts of the
scholarships awarded during the immediately preceding
school year to eligible students in grades kindergarten
through eight.
(v) The number of scholarships awarded during the
immediately preceding school year to eligible students in
grades nine through 12.
(vi) The total and average amounts of the
scholarships awarded during the immediately preceding
school year to eligible students in grades nine through
12.
(vii) Where the scholarship organization or pre-
kindergarten scholarship organization collects
information on a county-by-county basis, the total number
and the total amount of scholarships awarded during the
immediately preceding school year to residents of each
county in which the scholarship organization or pre-
kindergarten scholarship organization awarded
scholarships.
(viii) The total number of scholarship applications
processed and the amounts of any application fees
charged, either per scholarship application or in the
aggregate through a third-party processor.
(ix) The organization's Federal Form 990 or other
Federal form indicating the tax status of the
organization for Federal tax purposes, if any, and a copy
of a compilation, review or audit of the organization's
financial statements conducted by a certified public
accounting firm.
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(1.1) For the 2025-2026 fiscal year and each fiscal year
thereafter:
(i) For each scholarship award given to an
applicant:
(A) An indicator of whether the applicant was an
eligible student or an eligible student with a
disability.
(B) An indicator of whether the applicant was in
grades kindergarten through eight or grades nine
through 12.
(C) The dollar amount of the scholarship award.
(D) For the year in which the scholarship award
was used:
(I) The name of the applicant's school
district of residence.
(II) The name of the school entity that the
applicant attended.
(ii) The information provided under subparagraph (i)
shall not include personally identifiable information.
(2) The information required under paragraphs (1) and
(1.1) shall be submitted on a form provided by the
department. No later than September 1 of each year, the
department shall annually distribute such sample forms,
together with the forms on which the reports are required to
be made, to each listed scholarship organization and pre-
kindergarten scholarship organization.
(2.1) Beginning with the annual report due November 1,
2026, the department shall annually post the information
required under paragraph (1.1) in a downloadable spreadsheet
on the department's publicly accessible Internet website.
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(3) The department may not require any other information
to be provided by scholarship organizations or pre-
kindergarten scholarship organizations, except as expressly
authorized in this article.
(d) Educational improvement organization.--
(1) An application submitted by an educational
improvement organization must describe its proposed
innovative educational program or programs in a form
prescribed by the department. The department shall consult
with the Department of Education as necessary. The department
shall review and approve or disapprove the application. In
order to be eligible to participate in the educational
improvement tax credit program established under this
article, an educational improvement organization must agree
to annually report the following information to the
department by November 1 of each year:
(i) The name of the innovative educational program
or programs and the total amount of the grant or grants
made to those programs during the immediately preceding
school year.
(ii) A description of how each grant was utilized
during the immediately preceding school year and a
description of any demonstrated or expected innovative
educational improvements.
(iii) The names of the public schools and school
districts where innovative educational programs that
received grants during the immediately preceding school
year were implemented.
(iv) Where the educational improvement organization
collects information on a county-by-county basis, the
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total number and the total amount of grants made during
the immediately preceding school year for programs at
public schools in each county in which the educational
improvement organization made grants.
(v) The organization's Federal Form 990 or other
Federal form indicating the tax status of the
organization for Federal tax purposes, if any, and a copy
of a compilation, review or audit of the organization's
financial statements conducted by a certified public
accounting firm.
(2) The information required under paragraph (1) shall
be submitted on a form provided by the department. No later
than September 1 of each year, the department shall annually
distribute such sample forms, together with the forms on
which the reports are required to be made, to each listed
educational improvement organization.
(2.1) The department shall annually post the information
required under paragraph (1)(i), (ii), (iii) and (iv) in a
downloadable spreadsheet on the department's publicly
accessible Internet website.
(3) The department may not require any other information
to be provided by educational improvement organizations,
except as expressly authorized in this article.
(d.1) Opportunity scholarship organizations.--
(1) An opportunity scholarship organization must enhance
the educational opportunities available to students in this
Commonwealth by providing opportunity scholarships to
eligible students who reside within the attendance boundary
of low-achieving schools to attend schools which are not low-
achieving schools and which are not public schools within the
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eligible student's school district of residence. By February
15 of each year, an opportunity scholarship organization must
certify to the department that the organization is eligible
to participate in the opportunity scholarship tax credit
program.
(2) For each fiscal year through the 2024-2025 fiscal
year, an opportunity scholarship organization must agree to
report the following information on a form provided by the
department by November 1 of each year:
(i) The total number of applications for opportunity
scholarships received during the immediately preceding
school year from eligible students in grades kindergarten
through eight.
(ii) The number of opportunity scholarships awarded
during the immediately preceding school year to eligible
students in grades kindergarten through eight.
(iii) The total and average amounts of the
opportunity scholarships awarded during the immediately
preceding school year to eligible students in grades
kindergarten through eight.
(iv) The total number of applications for
opportunity scholarships received during the immediately
preceding school year from eligible students in grades
nine through 12.
(v) The number of opportunity scholarships awarded
during the immediately preceding school year to eligible
students in grades nine through 12.
(vi) The total and average amounts of the
opportunity scholarships awarded during the immediately
preceding school year to eligible students in grades nine
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through 12.
(vii) Where the opportunity scholarship organization
collects information on a county-by-county basis, the
total number and the total amount of opportunity
scholarships awarded during the immediately preceding
school year to residents of each county in which the
opportunity scholarship organization awarded opportunity
scholarships.
(viii) The number of opportunity scholarships
awarded during the immediately preceding school year to
applicants with a household income that does not exceed
185% of the Federal poverty level.
(ix) The total and average amounts of opportunity
scholarships awarded during the immediately preceding
school year to applicants with a household income that
does not exceed 185% of the Federal poverty level.
(x) The number of opportunity scholarships awarded
during the immediately preceding school year to
applicants with a household income that does not exceed
185% of the Federal poverty level and who reside within a
first class school district.
(xi) The total and average amounts of opportunity
scholarships awarded during the immediately preceding
school year to applicants with a household income that
does not exceed 185% of the Federal poverty level and who
reside within a first class school district.
(xii) The number of opportunity scholarships awarded
during the immediately preceding school year to
applicants with a household income that does not exceed
185% of the Federal poverty level and who reside within a
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school district that was designated as a financial
recovery school district under Article VI-A of the Public
School Code of 1949 at the time of the award.
(xiii) The total and average amounts of opportunity
scholarships awarded during the immediately preceding
school year to applicants with a household income that
does not exceed 185% of the Federal poverty level and who
reside within a school district that was designated as a
financial recovery school district under Article VI-A of
the Public School Code of 1949 at the time of the award.
(xiv) The total number of opportunity scholarship
applications processed and the amounts of any application
fees charged either per opportunity scholarship
application or in the aggregate through a third-party
processor.
(xv) The opportunity scholarship organization's
Federal Form 990 or other Federal form indicating the tax
status of the opportunity scholarship organization for
Federal tax purposes, if any, and a copy of a
compilation, review or audit of the opportunity
scholarship organization's financial statements conducted
by a certified public accounting firm.
(2.1) For the 2025-2026 fiscal year and each fiscal year
thereafter, an opportunity scholarship organization must
agree to report the following information on a form provided
by the department by November 1 of each year:
(i) For each scholarship award given to an
applicant:
(A) An indicator of whether the applicant was an
eligible student or an eligible student with a
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disability.
(B) An indicator of whether the applicant was in
grades kindergarten through eight or grades nine
through 12.
(C) The dollar amount of the scholarship award.
(D) For the year in which the scholarship award
was used:
(I) The name of the applicant's school
district of residence.
(II) The name of the school entity that the
applicant attended.
(ii) The information provided under subparagraph (i)
may not include personally identifiable information.
(3) No later than September 1 of each year, the
department shall annually distribute such sample forms,
together with the forms on which the reports are required to
be made, to each listed opportunity scholarship organization.
(3.1) Beginning with the annual report due November 1,
2026, the department shall annually post the information
required under paragraph (2.1) in a downloadable spreadsheet
on the department's publicly accessible Internet website.
(4) The department may not require other information to
be provided by opportunity scholarship organizations, except
as expressly authorized in this article.
(d.2) Verification of income.--Each scholarship
organization, pre-kindergarten scholarship organization and
opportunity scholarship organization shall provide for an
application and review process for scholarship applicants that
includes a means of verification of household income, which may
include submission of the household members' most recently
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available Federal or State tax returns, if required to be filed
by the household members.
(d.3) Scholarship organization for economically
disadvantaged schools.--
(1) Effective July 1, 2022, in addition to the other
requirements of this article, a scholarship organization that
intends to provide scholarship awards to applicants of
economically disadvantaged schools must demonstrate a history
of serving schools throughout this Commonwealth and the
capacity to distribute scholarships Statewide to applicants
of economically disadvantaged schools.
(2) A scholarship organization must agree to distribute
scholarships to applicants of economically disadvantaged
schools not later than December 15 of the applicable school
year.
(3) Notwithstanding any other provision of this article
to the contrary, the department may not for any school year
qualify more than one scholarship organization for the
provision of scholarships to applicants of economically
disadvantaged schools.
(4) A scholarship organization for economically
disadvantaged schools shall annually report the following
information to the department by January 15 of each year:
(i) Scholarship awards by family household income.
(ii) The school district where the scholarship
recipient currently resides.
(iii) The school that the student attended in the
year prior to the scholarship award.
(iv) The total number, amount and average
scholarship awarded.
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(4.1) A scholarship organization for economically
disadvantaged schools shall contribute at least 99% of its
annual receipts for economically disadvantaged schools for
scholarships.
(5) The department may not require additional
information to be provided by a scholarship organization for
economically disadvantaged schools except as expressly
authorized under this article.
(e) Notification.--The department shall notify the
scholarship organization, pre-kindergarten scholarship
organization, educational improvement organization or
opportunity scholarship organization that the organization meets
the requirements of and is qualified under this article no later
than 60 days after the organization has submitted the
information required under this section.
(f) Publication.--The department shall annually transmit a
list of each scholarship organization, pre-kindergarten
scholarship organization, educational improvement organization
and opportunity scholarship organization qualified under this
section to the Legislative Reference Bureau for publication in
the next available issue of the Pennsylvania Bulletin. The list
shall also be posted and updated as necessary on the publicly
accessible Internet website of the department. The list shall
separately identify the opportunity scholarship organization
that qualifies under subsection (d.3).
Section 1704-F. Application by business firms.
(a) Scholarship organization, pre-kindergarten scholarship
organization or opportunity scholarship organization.--
(1) A business firm shall apply to the department for a
tax credit for contributions to a scholarship organization,
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pre-kindergarten scholarship organization or opportunity
scholarship organization under section 1705-F.
(2) A business firm that intends to apply to the
department for a tax credit for contributions for students
attending an economically disadvantaged school must submit an
application separate from an application for tax credits to
another scholarship organization, pre-kindergarten
scholarship organization or opportunity scholarship
organization. The contribution shall be made to the
designated scholarship organization for the economically
disadvantaged schools and shall be separately accounted for
and distributed by the designated scholarship organization.
(3) A business firm shall receive a tax credit under
this article if the scholarship organization, pre-
kindergarten scholarship organization or opportunity
scholarship organization that receives the contribution
appears on the list established under section 1703-F(f),
subject to the limitations in sections 1705-F and 1706-F.
(b) Educational improvement organization.--A business firm
must apply to the department for a credit for a contribution to
an educational improvement organization under section 1705-F. A
business firm shall receive a tax credit under this article if
the department has approved the program provided by the
educational improvement organization that receives the
contribution, subject to the limitations in sections 1705-F and
1706-F.
(c) Availability of tax credits.--Tax credits under this
article shall be made available by the department on a first-
come, first-served basis within the limitation established under
section 1706-F(a).
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(d) Contributions.--A contribution by a business firm to a
scholarship organization, pre-kindergarten scholarship
organization, opportunity scholarship organization or
educational improvement organization shall be made no later than
60 days following the approval of an application under
subsection (a) or (b). In the event a business firm does not
make a minimum of 50% of the full amount of the approved
contribution and has not notified the department of the amount
of unused contributions within 14 days of approval, the business
firm's application may not be approved in the immediately
succeeding fiscal year for more than 150% of the actual amount
contributed in the previous fiscal year.
(e) Application in the alternative.--At the time of
application for an educational improvement or opportunity
scholarship tax credit, the department shall advise a business
firm that the firm may elect that its application for a
particular credit will, in the alternative, be deemed an
application received by the department on the same date as the
preferred application, but for a different tax credit authorized
under this section if the business firm's preferred choice of
tax credit is not available. When a business firm does not
receive its preferred choice of tax credit, the department shall
promptly consider the business firm's application in the
alternative for a different tax credit authorized under this
section.
Section 1705-F. Tax credits.
(a) Scholarship or educational improvement organizations.--
In accordance with section 1706-F, the Department of Revenue
shall grant a tax credit against any applicable tax to a
business firm providing proof of a contribution to a scholarship
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organization or educational improvement organization in the
taxable year in which the contribution is made in accordance
with the following:
(1) The tax credit shall not exceed 75% or, in the case
of a contribution to the scholarship organization for
economically disadvantaged schools, 85% of the total amount
contributed during the taxable year by the business firm.
(2) For fiscal year 2014-2015, the tax credit shall not
exceed $750,000 annually per business firm for contributions
made to scholarship organizations or educational improvement
organizations except as provided under subsection (i).
(3) For fiscal year 2024-2025 and each fiscal year
thereafter, the $750,000 annual tax credit limitation in
paragraph (2) shall not apply for contributions made by a
business firm to the scholarship organization for
economically disadvantaged schools.
(a.1) Opportunity scholarship organizations.--In accordance
with section 1706-F, the Department of Revenue shall grant a tax
credit against any applicable tax to a business firm providing
proof of a contribution to an opportunity scholarship
organization in the taxable year in which the contribution is
made in accordance with the following:
(1) The tax credit shall not exceed 75% of the total
amount contributed during the taxable year by the business
firm.
(2) For fiscal year 2014-2015, and each fiscal year
thereafter, the tax credit shall not exceed $750,000 annually
per business firm for contributions made to opportunity
scholarship organizations, except as provided in subsection
(i).
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(b) Additional amount.--Notwithstanding subsections (a)(1)
and (a.1)(1), in accordance with section 1706-F, the Department
of Revenue shall grant a tax credit of up to 90% or, in the case
of a contribution to the scholarship organization for
economically disadvantaged schools, 99% of the total amount
contributed during the taxable year if the business firm
provides a written commitment to provide the scholarship
organization, educational improvement organization or
opportunity scholarship organization with the same amount of
contribution for two consecutive tax years. The business firm
must provide the written commitment under this subsection to the
department at the time of application.
(c) Pre-kindergarten scholarship organizations.--In
accordance with section 1706-F, the Department of Revenue shall
grant a tax credit against any applicable tax to a business firm
providing proof of a contribution to a pre-kindergarten
scholarship organization in the taxable year in which the
contribution is made in accordance with the following:
(1) The tax credit shall be equal to 100% of the first
$10,000 contributed during the taxable year by the business
firm and shall not exceed 90% of the remaining amount
contributed during the taxable year by the business firm. At
the time of application, a business firm may provide a
written commitment to the department to provide the pre-
kindergarten scholarship organization with at least the same
amount of contribution for two consecutive years.
(2) The tax credit shall not exceed $200,000 annually
per business firm for contributions made to pre-kindergarten
scholarship organizations, except as provided in subsection
(i).
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(d) Combination of tax credits.--In accordance with section
1706-F, a business firm may receive tax credits from the
Department of Revenue in any tax year for any combination of
contributions under subsection (a), (a.1), (b) or (c). Except as
provided in subsection (i), in no case may a business firm
receive tax credits in any tax year in excess of the following:
(1) $750,000 for combined contributions to scholarship
organizations, other than the scholarship organization for
economically disadvantaged schools, and educational
improvement organizations under subsections (a) and (b).
(2) $750,000 for contributions to opportunity
scholarship organizations under subsections (a.1) and (b).
(3) $200,000 for contributions to pre-kindergarten
scholarship organizations under subsection (c).
(e) Pass-through entity.--
(1) If a pass-through entity does not intend to use all
approved tax credits under this section, it may elect in
writing to distribute for no consideration all or a portion
of the credit to shareholders, members or partners in
proportion to the percentage interest of the shareholder,
member or partner in distributions from the pass-through
entity, which credits may be used by the shareholders,
members or partners in the taxable year in which the
contribution is made or in the taxable year immediately
following the year in which the contribution is made. The
election shall designate the year in which the distributed
credits are to be used and shall be made according to
procedures established by the Department of Revenue. A pass-
through entity that received a distribution from a pass-
through entity under this paragraph may make a distribution
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under this paragraph.
(2) A pass-through entity and a shareholder, member or
partner of a pass-through entity shall not claim the credit
under this section for the same contribution.
(3) The shareholder, member or partner may not carry
forward, carry back, obtain a refund of or sell or assign the
credit.
(4) An individual shareholder, partner or member may
apply a credit distributed under this section to income
taxable under Article III to the shareholder, partner or
member, to the spouse of the shareholder, partner or member
or to both, if both the shareholder, partner or member and
the spouse report income on a joint personal income tax
return.
(f) Restriction on applicability of credits.--No credits
granted under this section shall be applied against any tax
withheld by an employer from an employee under Article III.
(g) Time of application for credits.--
(1) Except as provided in paragraph (2), the department
may accept applications for tax credits available during a
fiscal year no earlier than July 1 of each fiscal year.
(2) The application of any business firm for tax credits
available during a fiscal year as part of the second year of
a two-year commitment or as a renewal of a two-year
commitment which was fulfilled in the previous fiscal year
may be accepted no earlier than May 15 preceding the fiscal
year. In order to be eligible for the early application date
under this paragraph, the contributions included in the
second year of a two-year commitment or renewal of a two-year
commitment must be made to the same type of organization.
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(3) Applications for tax credits submitted on July 1
under paragraph (1) for a two-year commitment by a business
firm that applied for and was denied credits in the prior
fiscal year and that had been approved for tax credits in a
prior fiscal year shall be considered prior to an application
from a business firm that does not meet the criteria in this
paragraph. A business firm seeking preference under this
paragraph shall include proof of prior approval tax credits
in its July 1 application.
(g.1) Approval of tax credits.--Unless otherwise requested
by the business firm and agreed to by both the business firm and
the department, and unless all authorized credits have already
been awarded:
(1) For fiscal year 2016-2017, and each fiscal year
thereafter, the department shall give written notice of its
approval to each business firm that submitted a completed
application under subsection (g) by August 15, or 30 days
following receipt of the completed application, whichever is
later.
(2) For fiscal year 2016-2017, and each fiscal year
thereafter, the department shall give written notice of its
approval to each business firm that submitted a completed
application under subsection (j)(2) within 30 days following
receipt of the completed application.
(3) Should the department fail, for a period of at least
10 days, to timely transmit any of the written notices
required by this subsection, the affected business may bring
an action for injunction or other appropriate relief in
Commonwealth Court.
(h) Waiting list.--The department shall maintain a waiting
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list consisting of each business firm which chooses to be
included on the list and whose application has not been approved
because all available tax credits have been awarded. A business
firm that was not awarded a tax credit due to a lack of
available tax credits shall be notified of and offered a place
on the waiting list. When tax credits become available, the
department shall award the tax credits to the business firms in
the order in which the business firms were placed on the waiting
list.
(i) Temporary increase in maximum tax credits available.--
(1) If all tax credits authorized under this article for
contributions to the category of scholarship organizations,
opportunity scholarship organizations or pre-kindergarten
scholarship organizations have not been awarded as of October
1 of any fiscal year, then for applications accepted by the
department from October 1 through November 30 of such fiscal
year, the limitations set forth in subsections (a), (a.1),
(c) and (d) relating to the maximum amount of tax credits a
business firm can receive during a fiscal year for
contributions to each such category of organizations shall
not apply. Under this paragraph, the department may accept
applications under section 1704-F from October 1 through
November 30 as follows:
(i) A business firm, including a business firm that
already applied for the maximum tax credits available
pursuant to subsections (a) and (d), may apply under
section 1704-F(a) for up to the total amount of tax
credits remaining available for contributions to
scholarship organizations for the fiscal year as set
forth in section 1706-F(a)(1).
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(ii) A business firm, including a business firm that
already applied for the maximum tax credits available
pursuant to subsections (a.1) and (d), may apply under
section 1704-F(a) for up to the total amount of tax
credits remaining available for contributions to
opportunity scholarship organizations for the fiscal year
as set forth in section 1706-F(a)(3).
(iii) A business firm, including a business firm
that already applied for the maximum tax credits
available pursuant to subsections (c) and (d), may apply
under section 1704-F(a) for up to the total amount of tax
credits remaining available for contributions to pre-
kindergarten scholarship organizations for the fiscal
year as set forth in section 1706-F(a)(2).
(2) The provisions of subsection (b) shall not apply to
applications for tax credits made under this subsection. Tax
credits awarded under this subsection shall not exceed 75% of
the total amount contributed during the taxable year by a
business firm pursuant to an application filed under this
subsection.
(3) Prior to the award of tax credits applied for under
this subsection, the department shall first award tax credits
applied for by a business firm during the period October 1
through November 30 in an amount no greater than the maximum
amount of tax credits for which a business firm is eligible
under subsections (a), (a.1), (c) and (d). The tax credits
shall be awarded on a first-come, first-served basis as set
forth in section 1704-F(c).
(4) After the department has awarded tax credits under
paragraph (3), any tax credits remaining available within the
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category of scholarship organizations, opportunity
scholarship organizations and pre-kindergarten scholarship
organizations shall be awarded based on the total amount of
tax credits within each category of organization for which
applications are received under this subsection from October
1 through November 30 of the fiscal year as follows:
(i) If the total amount of tax credits applied for
by all business firms under this subsection does not
exceed the total amount of tax credits that remained
available for award within a category as of October 1,
less those tax credits awarded under paragraph (3), then
each business firm may be awarded the full amount of tax
credits applied for.
(ii) If the total amount of tax credits applied for
by all business firms under this subsection exceeds the
total amount of tax credits that remained available for
award within a category as of October 1, less those tax
credits awarded under paragraph (3), then each business
firm may be awarded an amount of tax credits determined
by multiplying the amount of tax credits applied for by
the business firm by a ratio, the numerator of which is
the total amount of tax credits that remained available
for award within the category as of October 1, less those
awarded as set forth in paragraph (3), and the
denominator of which is the total amount of tax credits
applied for by all business firms under this subsection.
(4.1) If all tax credits authorized under this article
for contributions to the category of scholarship
organizations, opportunity scholarship organizations or pre-
kindergarten scholarship organizations have not been awarded
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as of November 30 of any fiscal year, then for applications
accepted by the department from December 1 through the end of
the fiscal year, the limitations set forth in subsections
(a), (a.1), (c) and (d) relating to the maximum amount of tax
credits a business firm can receive during a fiscal year for
contributions to each such category of organizations shall
not apply. Under this paragraph, the department may accept
applications under section 1704-F from December 1 through the
end of the fiscal year and shall award tax credits under this
article for contributions to the category of scholarship
organizations, opportunity scholarship organizations or pre-
kindergarten scholarship organizations on a first-come,
first-served basis until all tax credits available for the
fiscal year have been exhausted.
(5) Notwithstanding a temporary increase in maximum tax
credits available under this subsection, the limitations set
forth in subsections (a), (a.1), (c) and (d) relating to the
maximum amount of tax credits a business firm can receive
during a year for contributions to a category of scholarship
organizations, opportunity scholarship organizations or pre-
kindergarten scholarship organizations shall be reinstated
for all applications accepted by the department after June 30
of the fiscal year.
(j) Reallocation of tax credits.--
(1) Beginning on January 1 of any fiscal year, if any
tax credits authorized under this article for contributions
to any of the categories of scholarship organizations,
opportunity scholarship organizations or pre-kindergarten
scholarship organizations remain unawarded, such unawarded
tax credits may be reallocated to any of the categories of
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scholarship organizations, opportunity scholarship
organizations or pre-kindergarten scholarship organizations
for which all available tax credits have been awarded. The
department shall, within 10 business days, inform each
business firm on the waiting list maintained by the
department under subsection (h) that tax credits remain
available under another category for which the business firm
has not yet applied. If a business firm notified under this
paragraph elects, the department shall reallocate available
tax credits for award to the business firm in the business
firm's preferred tax credit category, notwithstanding the
limitations contained in section 1706-F(a). Each business
firm shall have 10 business days from the date of the
department's notice to elect a reallocation of tax credits
under this paragraph. The department shall award tax credits
on a first-come, first-served basis.
(2) After the department has awarded tax credits under
paragraph (1), the department shall accept new applications
for reallocation of tax credits from any of the categories of
scholarship organizations, opportunity scholarship
organizations or pre-kindergarten scholarship organizations
for which tax credits remain available to the applicant's
preferred category of scholarship organizations, opportunity
scholarship organizations or pre-kindergarten scholarship
organizations for which all available tax credits have been
awarded, notwithstanding any limitations contained in section
1706-F(a) or the limitations in subsections (a), (a.1), (c)
and (d). The department shall award tax credits on a first-
come, first-served basis.
(2.1) In any fiscal year, the first $10,000,000 in tax
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credits available for reallocation under paragraphs (1) and
(2) shall be set aside for contributions to pre-kindergarten
scholarship organizations. If $10,000,000 in tax credits have
not been awarded to pre-kindergarten scholarship
organizations under paragraphs (1) and (2) prior to March 1
of any fiscal year, the remaining tax credits available for
reallocation under paragraphs (1) and (2) shall be made
available for contributions to any of the categories of
scholarship organizations, opportunity scholarship
organizations or pre-kindergarten scholarship organizations.
(3) No tax credits shall be awarded under this
subsection until the department has completed the award of
tax credits for applications made under subsection (i).
(4) The department shall not reallocate tax credits from
any of the categories of scholarship organizations,
opportunity scholarship organizations or pre-kindergarten
scholarship organizations to the category of educational
improvement organizations.
(5) Subsections (b) and (g) shall not apply to an
application for reallocation of tax credits under this
subsection.
Section 1706-F. Limitations.
(a) Amount.--
(1) The total aggregate amount of all tax credits
approved for contributions from business firms to scholarship
organizations, educational improvement organizations and pre-
kindergarten scholarship organizations shall not exceed
$615,000,000 in a fiscal year. The following shall apply:
(i) No less than $400,000,000 of the total aggregate
amount shall be used to provide tax credits for
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contributions from business firms to scholarship
organizations.
(ii) No less than $74,500,000 of the total aggregate
amount shall be used to provide tax credits for
contributions from business firms to educational
improvement organizations.
(iii) The total aggregate amount of all tax credits
approved for contributions from business firms to pre-
kindergarten scholarship organizations shall not exceed
$30,500,000 in a fiscal year.
(iv) No less than $110,000,000 of the total
aggregate amount shall be used to provide tax credits for
contributions from business firms to increase the
scholarship or pre-kindergarten scholarship by up to
$2,000 or, in the case of a scholarship for a student
attending a secondary school, by up to $4,000, for a
student attending an economically disadvantaged school,
to the extent that the total amount of scholarships, pre-
kindergarten scholarships and opportunity scholarships
will not exceed the lesser of $8,500 or the school's
tuition.
(2) The total aggregate amount of all tax credits
approved for contributions from business firms to opportunity
scholarship organizations shall not exceed $90,000,000 in a
fiscal year.
(b) Activities.--No tax credit shall be approved for
activities that are a part of a business firm's normal course of
business.
(c) Tax liability.--
(1) Except as provided in paragraph (2), a tax credit
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granted for any one taxable year may not exceed the tax
liability of a business firm.
(2) In the case of a credit granted to a pass-through
entity which elects to distribute the credit according to
section 1705-F(e), a tax credit granted for any one taxable
year and distributed to a shareholder, member or partner may
not exceed the tax liability of the shareholder, member or
partner.
(d) Use.-- Subject to subsection (d.1), a tax credit not used
by the applicant in the taxable year the contribution was made
or in the year designated by the shareholder, member or partner
to whom the credit was transferred under section 1705-F(e) may
not be carried forward or carried back and is not refundable or
transferable.
(d.1) Pandemic relief.--
(1) A tax credit awarded to a business firm during the
2020-2021 or 2021-2022 fiscal year that cannot be used by the
business firm during the fiscal year in which awarded may be
carried forward and used during the two taxable years
following the taxable year in which the tax credit was
awarded.
(2) Tax credits that are carried forward under this
subsection shall not diminish the total amount of tax credits
that may otherwise be awarded to a business firm under
section 1705-F or that may be awarded to all business firms
in the aggregate under subsection (a).
(e) Nontaxable income.--A scholarship from any category of
organization received by an eligible student or eligible pre-
kindergarten student shall not be considered to be taxable
income for the purposes of Article III.
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(f) Financial assistance.--A scholarship from any category
of organization received by an eligible student or eligible pre-
kindergarten student shall not constitute an appropriation or
financial assistance to the school attended by the recipient.
Section 1707-F. Lists.
The Department of Revenue shall provide a list of all
scholarship organizations, pre-kindergarten scholarship
organizations, educational improvement organizations and
opportunity scholarship organizations receiving contributions
from business firms granted a tax credit under this article to
the General Assembly by June 30 of each year.
Section 1708-F. Guidelines.
The department in consultation with the Department of
Education shall develop guidelines to determine the eligibility
of an innovative educational program.
Section 1709-F. Opportunity scholarships.
(a) Notice.--By February 1 of each year, the department
shall provide all opportunity scholarship organizations with a
list of the low-achieving schools located within each school
district.
(b) Award.--An opportunity scholarship organization may
award an opportunity scholarship to an applicant who resides
within the attendance boundary of a low-achieving school to
attend a participating public school or a participating
nonpublic school selected by the parent of the applicant. If an
applicant who received an opportunity scholarship for the prior
school year resides within the attendance boundary of a school
that was removed from the list of low-achieving schools provided
by the department under subsection (a), the applicant may
receive an opportunity scholarship. The opportunity scholarship
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may be for each year of enrollment in a participating public
school or participating nonpublic school for up to the lesser of
five years or until completion of grade 12, provided the
applicant otherwise remains eligible. In awarding scholarships,
an opportunity scholarship organization shall give preference to
any of the following:
(1) An applicant who received an opportunity scholarship
for the prior school year.
(2) An applicant of a household with a household income
that does not exceed 185% of the Federal poverty level for
the school year preceding the school year for which the
application is being made.
(3) An applicant of a household with a household income
that does not exceed 185% of the Federal poverty level for
the school year preceding the school year for which the
application is being made and who resides within any of the
following:
(i) A first class school district.
(ii) A school district designated as a financial
recovery school district under Article VI-A of the Public
School Code of 1949 for the year for which the award is
made.
(c) Home schooling.--An opportunity scholarship organization
shall not award an opportunity scholarship to an applicant for
enrollment in a home education program under section 1327.1 of
the Public School Code of 1949.
(d) Funding.--The aggregate amount of opportunity
scholarships shall not exceed the aggregate amount of
contributions made by business firms to the opportunity
scholarship organization.
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(e) Amount.--
(1) The maximum amount of an opportunity scholarship
awarded to an applicant without a disability shall be $8,500.
(2) The maximum amount of an opportunity scholarship
awarded to an applicant with a disability shall be $15,000.
(3) In no case shall the combined amount of the
opportunity scholarship awarded to a recipient and any
additional financial assistance provided to the recipient
exceed the tuition rate and school-related fees for the
participating public school or participating nonpublic school
that the recipient will attend.
Section 1709.1-F. Economically disadvantaged school
scholarships.
(a) Reports.--
(1) Each school that desires to be designated as an
economically disadvantaged school for a school year must
report the following information to the scholarship
organization for economically disadvantaged schools by the
January 1 preceding the applicable school year:
(i) The total number of students who attend the
school as of the date of the report and are the
recipients of a scholarship under this article in an
amount, exclusive of any amount received under section
1706-F(a)(1)(iv), for a pre-kindergarten, kindergarten or
elementary school of at least $500 and for a secondary
school of at least $1,000.
(ii) The total number of students attending the
school as of the date of the report.
(2) The information required under paragraph (1) shall
be submitted on a form provided by the scholarship
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organization for economically disadvantaged schools. No later
than the October 15 preceding each school year, the
scholarship organization for economically disadvantaged
schools shall annually distribute or make available
electronically to each school in this Commonwealth the forms
on which the reports are required to be made.
(3) The scholarship organization for economically
disadvantaged schools shall submit the school's information
to the department by the February 1 preceding the school
year.
(b) Notice of designation.--
(1) No later than March 1 after the scholarship
organization for economically disadvantaged schools has
submitted the information received under subsection (a)(1) to
the department, the department shall notify the school and
the scholarship organization for economically disadvantaged
schools whether the school meets the requirements of, and
will be designated as, an economically disadvantaged school
for the applicable school year.
(2) The department shall annually transmit notice of a
list of each school designated as an economically
disadvantaged school under this section to the Legislative
Reference Bureau for publication in the next available issue
of the Pennsylvania Bulletin. The list shall be posted and
updated as necessary on the department's publicly accessible
Internet website.
(c) Administration.--
(1) Each school that has been designated by the
department as an economically disadvantaged school for an
applicable school year shall notify the scholarship
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organization for economically disadvantaged schools no later
than November 15 of the applicable school year of the
following information for each recipient of a scholarship
registered to attend the school for the applicable school
year:
(i) The recipient's name and address.
(ii) The grade of the recipient for the school year
with respect to which the scholarship and tuition grant
shall be received.
(iii) The type and amount of scholarships under this
article entitled to educational tax credits that were
received by the recipient, exclusive of any amount
received under section 1706-F(a)(1)(iv).
(iv) The names and addresses of the recipient's
parents or guardians.
(v) The amount of tuition charged.
(2) The scholarship organization for economically
disadvantaged schools shall distribute the money on a pro
rata basis among all students in accordance with section
1703-F(d.3).
(3) Information submitted under this section by a school
designated as an economically disadvantaged school shall
remain confidential and shall not be accessible for
inspections and duplication in accordance with the act of
February 14, 2008 (P.L.6, No.3), known as the Right-to-Know
Law. The information may be used for administration of the
program.
(d) References.--A scholarship award under this article paid
to an economically disadvantaged school may be referred to as a
scholarship supplement.
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Section 1710-F. Low-achieving schools.
(a) List of low-achieving schools.--By February 1 of each
year, the Department of Education shall publish on the
Department of Education's publicly accessible Internet website a
list of the low-achieving schools for the following school year.
The Department of Education shall transmit notice of the list to
the Legislative Reference Bureau for publication in the next
available issue of the Pennsylvania Bulletin.
(b) Notice.--By February 1 of each year, the Department of
Education shall notify every school district identified as
having at least one low-achieving school of such identification
and shall furnish the school district with a list of the low-
achieving schools located within the school district.
(c) Publication.--Within 15 days of receipt of a
notification under subsection (b), a school district shall post
on the district's publicly accessible Internet website notice of
all of the following:
(1) A description of the opportunity scholarship
program.
(2) Instructions for applying for an opportunity
scholarship.
(3) A list of schools in the school district that have
been designated by the Department of Education as low-
achieving schools.
(4) Notice that a parent must directly contact a school
district of a participating public school or a participating
nonpublic school if the parent seeks to enroll the student in
the opportunity scholarship program.
(d) Notification to parents.--
(1) Within 15 days of receipt of a notification under
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subsection (b), a school district shall notify the parents of
each student who is currently attending or residing within
the attendance boundary of a low-achieving school during the
school year of the school's designation.
(2) Upon registration of a kindergarten student, a
school district shall notify the parents of the kindergarten
student that the student will be assigned to a low-achieving
school during the school year of the school's designation.
(3) The notice shall be in a form provided by the
Department of Education and shall provide the following
information regarding the opportunity scholarship program:
(i) A description of the opportunity scholarship
program.
(ii) Instructions for obtaining information about
applying for an opportunity scholarship under the
opportunity scholarship program.
(iii) Notice of the parent's responsibilities with
regard to applying to a school district of a
participating public school or a participating nonpublic
school if the parent seeks to enroll the student in the
opportunity scholarship program.
(e) Average daily membership.--
(1) Notwithstanding any other provision of law to the
contrary, a recipient who was enrolled in the recipient's
resident school district or in a charter school, regional
charter school or cyber charter school when the recipient
first received an opportunity scholarship shall continue to
be counted in the average daily membership of the school
district for a period of one year after enrolling in a
participating public school or a participating nonpublic
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school.
(2) During the year referenced in paragraph (1) and each
school year thereafter, a school district of a participating
public school in which the recipient is enrolled shall not
include the recipient in the school district's average daily
membership.
Section 1711-F. School participation in program.
(a) Election.--
(1) By February 15 of each year, a nonpublic school may
elect to participate in the opportunity scholarship program
for the following school year.
(2) By February 15 of each year, a school district may
elect to participate in the opportunity scholarship program
for the following school year.
(b) Notice.--
(1) A school district or nonpublic school that elects to
participate under subsection (a) must notify the Department
of Education of the district's or nonpublic school's intent
to participate.
(2) For a school district, the notice under paragraph
(1) must be submitted on a form developed by the Department
of Education and shall specify all of the following:
(i) Each school within the school district which the
school district intends to make a participating public
school.
(ii) The amount of tuition and school-related fees
attributable to each available seat. The amount under
this subparagraph shall not exceed the amount calculated
under section 2561 of the Public School Code of 1949.
(3) For a nonpublic school, the notice under paragraph
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(1) must be submitted on a form developed by the Department
of Education and shall specify the amount of tuition and
school-related fees attributable to an available seat.
(c) Tuition rates.--
(1) No school district of a participating public school
or participating nonpublic school may charge a recipient a
higher tuition rate or school-related fee than the school
district of the participating public school or participating
nonpublic school would have charged to a similarly situated
student who is not receiving an opportunity scholarship.
(2) Notwithstanding the provisions of section 2561 of
the Public School Code of 1949, a school district of a
participating public school may charge a recipient a tuition
rate that is lower than that charged to students who are not
recipients of opportunity scholarships.
(d) Participating public school criteria.--The following
criteria apply to a participating public school:
(1) Except as otherwise provided in this article, a
school district shall enroll students in a participating
public school on a lottery basis from a pool of recipients
who meet the application deadline set by the Department of
Education until the participating public school fills the
school's available seats. The pool may not include a
recipient who:
(i) Has been expelled or is in the process of being
expelled under section 1317.2 , 1318 or 1318.1 of the
Public School Code of 1949 and applicable regulations of
the State Board of Education.
(ii) Has been recruited by the school district or
its representatives for athletic purposes.
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(2) The enrollment of recipients may not place the
school district in violation of a valid and binding
desegregation order.
(3) Priority shall be given to:
(i) An existing recipient.
(ii) A recipient who is a sibling of a student
currently enrolled in the school district.
(e) Participating nonpublic school criteria.--The following
criteria apply to a participating nonpublic school:
(1) The participating nonpublic school may not
discriminate on a basis which is illegal under Federal or
State laws applicable to nonpublic schools.
(2) The participating nonpublic school shall comply with
section 1521 of the Public School Code of 1949.
(3) The participating nonpublic school or its
representatives may not recruit a student for athletic
purposes.
(f) Student rules, policies and procedures.--
(1) Prior to enrollment of a recipient, a school
district of a participating public school or a participating
nonpublic school shall inform the parent of a recipient of
any and all rules, policies and procedures of the
participating public school or participating nonpublic
school, including any academic policies, disciplinary rules
and administrative procedures of the participating public
school or participating nonpublic school.
(2) Enrollment of a recipient in a participating public
school or participating nonpublic school shall constitute
acceptance of any rules, policies and procedures of the
participating public school or participating nonpublic
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school.
(g) Transportation.--
(1) Transportation of recipients shall be provided under
section 1361 of the Public School Code of 1949.
(2) Reimbursement shall be as follows:
(i) Transportation of a recipient attending a
participating public school shall be subject to
reimbursement under section 2541 of the Public School
Code of 1949.
(ii) Transportation of a recipient attending a
participating nonpublic school shall be subject to
reimbursement under sections 2509.3 and 2541 of the
Public School Code of 1949.
(h) Construction.--Nothing in this article shall be
construed to:
(1) Prohibit a participating nonpublic school from
limiting admission to a particular grade level, a single
gender or areas of concentration of the participating
nonpublic school, including mathematics, science and the
arts.
(2) Authorize the Commonwealth or any of its agencies or
officers or political subdivisions to impose any additional
requirements on a participating nonpublic school which are
not otherwise authorized under the laws of this Commonwealth
or to require a participating nonpublic school to enroll a
recipient if the participating nonpublic school does not
offer appropriate programs or is not structured or equipped
with the necessary facilities to meet the special needs of
the recipient or does not offer a particular program
requested.
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Section 1712-F. Tuition grants by school districts.
(a) General rule.--The board of school directors of a school
district may use funds received from the Commonwealth for
educational purposes to establish a program of tuition grants to
provide for the education of students who reside within the
district and attend or will attend a public or nonpublic school
on a tuition-paying basis.
(b) Nonpublic school grant amount.--For students who attend
or will attend a nonpublic school, the grant amount for each
student shall not exceed the amount of the per pupil State
subsidy for basic education of the school district of residence.
(c) Average daily membership.--
(1) A student who receives a tuition grant under this
section shall be included in the average daily membership for
purposes of determining the school district of residence's
basic education funding.
(2) A student who receives a grant under this section to
attend a public school outside the school district awarding
the tuition grant shall not be included in the average daily
membership of the school district the student attends.
(d) Guidelines.--
(1) The board of school directors of a school district
shall prepare guidelines on all the following:
(i) Establishment of an application form and
approval process.
(ii) Standards for verification of the accuracy of
application information.
(iii) Confirmation of attendance by a student who
receives a tuition grant.
(iv) Restrictive endorsement of grant checks by
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parents to the school chosen by the parents.
(v) Pro rata refunds of grants for students who
withdraw during the school year.
(vi) Repayment of refunded grants to the school
district.
(vii) Reasonable deadline dates for submission of
grant applications.
(2) The board of school directors of a school shall
announce the award of grants no later than August 1 of the
school year in which the grants will be utilized.
(3) Upon receipt of written confirmation of enrollment
from the student's school of choice, grants shall be paid to
the parents of a student by a check that may only be endorsed
to the selected school.
(4) In the event a student is no longer enrolled prior
to the completion of the school term, the school shall send
written notice to the school district.
(e) Nontaxable.--Grants awarded to students under this
section shall not:
(1) Be considered taxable income for purposes of a local
taxing ordinance or for purposes of Article III.
(2) Constitute financial assistance or appropriations to
the school attended by the student.
(f) Construction.--Nothing in this section shall be
construed to empower the Commonwealth or a school district or
any of their agencies or officers to do any of the following:
(1) Prescribe the course content or admissions criteria
for any religiously affiliated school.
(2) Compel any private school to accept or enroll a
student.
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(3) Impose any additional requirements on any private
school that are not otherwise authorized.
(4) Require any school to accept or retain a student if
the school does not offer programs or is not structured or
equipped with the necessary facilities to meet the special
needs of the student or does not offer a particular program
requested.
Section 1713-F. Original jurisdiction.
The Pennsylvania Supreme Court shall have exclusive and
original jurisdiction to hear a challenge or to render a
declaratory judgment concerning the constitutionality of this
article. The Pennsylvania Supreme Court may take such action as
the court deems appropriate, consistent with the Pennsylvania
Supreme Court's retaining jurisdiction over such a matter, to
find facts or to expedite a final judgment in connection with a
challenge or request for declaratory relief.
Section 3.1. Section 1828-G(c) of the act is amended to
read:
Section 1828-G. Business firms.
* * *
(c) Limitation.--The department may not approve more than
[$30,000,000] $60,000,000 in credit-eligible capital
contributions under this part.
Section 3.2. Section 1829-G(a)(3) and (b)(3) of the act are
amended and subsection (a) is amended by adding a paragraph to
read:
Section 1829-G. Tax credit certificates.
(a) Application.--
* * *
(3) [The] With respect to program one tax credit
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authority, the application shall be filed no later than
February 1 for credit-eligible capital contributions made in
the preceding calendar year.
(4) With respect to program two tax credit authority,
the application shall be filed no later than February 1 for
credit-eligible capital contributions made in the preceding
calendar year.
(b) Review, recommendation and approval.--
* * *
(3) In awarding tax credit certificates under this part,
the department:
(i) Beginning with fiscal year 2020-2021, may not
award tax credit certificates that would result in the
utilization of more than [$6,000,000] $12,000,000 in tax
credits in any fiscal year, except for tax credits
carried forward.
(ii) May not award more than [$30,000,000]
$60,000,000 in tax credit certificates, in the aggregate,
under this part.
Section 3.3. Article XXIX-D of the act is repealed:
[ARTICLE XXIX-D
COMPUTER DATA CENTER
EQUIPMENT INCENTIVE PROGRAM
SUBARTICLE A
PRELIMINARY PROVISIONS
Section 2901-D. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Blockchain." A distributed ledger technology in which the
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data is:
(1) shared across a network that creates a digital
ledger of verified transactions or information among network
participants; and
(2) typically linked using cryptography to maintain the
integrity of the digital ledger and execute other functions,
including the transfer of ownership or value.
"Computer data center." All or part of a facility that may
be composed of one or more businesses, owners or tenants, that
is or will be predominantly used to house working servers or
similar data storage systems and that may have uninterruptible
energy supply or generator backup power, or both, cooling
systems, towers and other temperature control infrastructure.
"Computer data center equipment." Equipment that is used to
outfit, operate or benefit a computer data center and component
parts, installations, refreshments, replacements and upgrades to
the equipment, whether any of the equipment is affixed to or
incorporated into real property, including:
(1) All equipment necessary for the transformation,
generation, distribution or management of electricity that is
required to operate computer servers or similar data storage
equipment, including generators, uninterruptible energy
supplies, conduit, gaseous fuel piping, cabling, duct banks,
switches, switchboards, batteries and testing equipment.
(2) All equipment necessary to cool and maintain a
controlled environment for the operation of the computer
servers or data storage systems and other components of the
computer data center, including mechanical equipment,
refrigerant piping, gaseous fuel piping, adiabatic and free
cooling systems, cooling towers, water softeners, air
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handling units, indoor direct exchange units, fans, ducting
and filters.
(3) All water conservation systems, including facilities
or mechanisms that are designed to collect, conserve and
reuse water.
(4) All software, including, but not limited to,
enabling software and licensing agreements, computer servers
or similar data storage equipment, chassis, networking
equipment, switches, racks, cabling, trays and conduits.
(5) All monitoring equipment and security systems.
(6) Modular data centers and preassembled components of
any item described in this definition, including components
used in the manufacturing of modular data centers.
(7) Other tangible personal property that is essential
to the operations of a computer data center.
"Department." The Department of Revenue of the Commonwealth.
"Facility." One or more parcels of land in this Commonwealth
and any structures and personal property contained on the land.
"New investment." Construction, expansion or build out of
data center space at either a new or an existing computer data
center on or after January 1, 2014, and the purchase and
installation of computer data center equipment, except for items
described under paragraph (4) of the definition of "computer
data center equipment."
"Owner or operator." Includes a single entity, multiple
entities or affiliated entities.
"Proof of work crypto-asset mining." The process of
performing computations to add a valid block of data to a
blockchain, excluding computations required to validate
individual transactions, typically in exchange for a reward or
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fee.
"Qualification period." Except as provided under sections
2931-D(d), 2935-D(b) and 2937-D(c), as follows:
(1) With respect to the owner or operator of a computer
data center certified under this article, a period of time
beginning on the date of certification of the computer data
center and expiring at the end of the fifteenth full calendar
year following the calendar year in which the owner or
operator filed an application for certification.
(2) With respect to a qualified tenant of the owner or
operator of a computer data center certified under this
article, a period of time beginning on the date that the
qualified tenant enters into an agreement concerning the use
or occupancy of the computer data center and expiring at the
earlier of the expiration of the term of the agreement or the
end of the 10th full calendar year following the calendar
year in which the qualified tenant enters into the agreement.
"Qualified tenant." An entity that contracts with the owner
or operator of a computer data center that is certified pursuant
to this article to use or occupy part of the computer data
center for at least 100 kilowatts per month for two or more
years.
"Tax exemption." The tax exemption provided under Subarticle
C.
"Tax refund." The tax refund provided for under Subarticle
B.
"Telecommunications provider." A provider of
telecommunications services as defined in 61 Pa. Code § 60.20
(relating to telecommunications service).
"Tenant." An entity that contracts with the owner or
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operator of a computer data center to use or occupy part of the
computer data center.
SUBARTICLE B
SALES AND USE TAX REFUND PROGRAM
Section 2911-D. Sales and use tax refund.
(a) Application.--Beginning July 1, 2017, an owner or
operator or qualified tenant of a computer data center certified
under this article may apply for a tax refund of taxes paid
under Article II upon the sale at retail or use of computer data
center equipment for installation in a computer data center,
purchased by:
(1) An owner or operator of a computer data center
certified under this article.
(2) A qualified tenant certified under this article.
(b) Applicability.--Taxes paid under Article II during the
qualification period shall be eligible for a refund under this
article.
(c) Exclusions.--The following do not qualify for a tax
refund:
(1) Computer data center equipment used by the computer
data center to:
(i) generate electricity for resale purposes to a
power utility, except for sales incidental to the primary
sale to computer data centers and which qualify under
subparagraph (ii); or
(ii) generate, provide or sell more than 5% of its
electricity outside of the computer data center.
(2) (Reserved).
Section 2912-D. Application for certification.
To be considered for a certification, an owner or operator of
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a computer data center shall submit to the department an
application on a form prescribed by the department that includes
the following:
(1) The owner's or operator's name, address and
telephone number.
(2) The address of the site where the facility is or
will be located, including, if applicable, information
sufficient to identify the specific portion or portions of
the facility comprising the computer data center.
(3) If the computer data center is to qualify under
section 2915-D(1), the following information:
(i) The anticipated investment associated with the
computer data center for which the certification is being
sought.
(ii) An affirmation, signed by an authorized
executive representing the owner or operator, that the
computer data center is expected to satisfy the
certification requirements prescribed in section 2915-
D(1).
(4) If the computer data center is to qualify under
section 2915-D(2), an affirmation, signed by an authorized
executive representing the owner or operator, that the
computer data center has satisfied, or will satisfy, the
certification requirements prescribed in section 2915-D(2).
(5) The department shall begin accepting applications no
later than 90 days after the effective date of this section.
Section 2913-D. Review of application.
(a) General rule.--Within 60 days after receiving a complete
and correct application, the department shall review the
application and either issue a written certification that the
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computer data center qualifies for the certification or provide
written reasons for its denial.
(b) Deemed approval.--Failure of the department to approve
or deny an application within 60 days after the date the owner
or operator of a computer data center submits the application to
the department constitutes certification of the computer data
center, and the department shall issue written certification to
the owner or operator within 14 days. The department may not
certify any computer data center after December 31, 2021.
Section 2914-D. Separation of facilities.
(a) Separate certification.--An owner or operator of a
computer data center may separate a facility into one or more
computer data centers, which may each receive a separate
certification, if each computer data center individually meets
the requirements prescribed in section 2915-D.
(b) Limitation.--A portion of a facility or an article of
computer data equipment shall not be deemed to be a part of more
than one computer data center.
(c) Aggregation.--An owner or operator may aggregate one or
more parcels, buildings or condominiums in a facility into a
single computer data center if, in the aggregate, the parcels,
buildings and condominiums meet the requirements of this
article.
Section 2915-D. Eligibility requirements.
A computer data center must meet one of the following
requirements, after taking into account the combined investments
made and annual compensation paid by the owner or operator of
the computer data center or the qualified tenant:
(1) On or before the fourth anniversary of
certification, the computer data center creates a minimum
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investment of:
(i) At least $25,000,000 of new investment if the
computer data center is located in a county with a
population of 250,000 or fewer individuals; or
(ii) At least $50,000,000 of new investment if the
computer data center is located in a county with a
population of more than 250,000 individuals.
(2) One or more taxpayers operating or occupying a
computer data center, in the aggregate, pay annual
compensation of at least $1,000,000 to employees at the
certified computer data center site for each year of the
certification after the fourth anniversary of certification.
Section 2916-D. Notification.
(a) Requirements satisfied.--On or before the fourth
anniversary of the certification of a computer data center, the
owner or operator of a computer data center shall notify the
department in writing whether the computer data center for which
the certification is requested has satisfied the requirements
prescribed in section 2915-D.
(b) Records.--Until a computer data center satisfies the
requirements prescribed in section 2915-D, the owner, operator
and qualified tenants shall maintain detailed records of all
investments created by the computer data center, including costs
of buildings and computer data center equipment, and all tax
refunds directly received by the owner, operator or qualified
tenant.
Section 2917-D. Revocation of certification.
(a) Revocation.--If the department determines that the
requirements of section 2915-D have not been satisfied, the
department may revoke the certification of a computer data
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center.
(b) Appeal.--The owner or operator of the computer data
center may appeal the revocation. Appeals filed under this
section shall be governed by Article II.
(c) Recapture.--If certification is revoked pursuant to this
section, the qualification period of any owner, operator or
qualified tenant of the computer data center expires, and the
department may recapture from the owner, operator or qualified
tenant all or part of the tax refund provided directly to the
owner or operator or qualified tenant. The department may give
special consideration or allow a temporary exemption from
recapture of the tax refund if there is extraordinary hardship
due to factors beyond the control of the owner or operator or
qualified tenant.
Section 2918-D. Guidelines.
The department shall publish guidelines and prescribe forms
and procedures as necessary for the purposes of this article.
Section 2919-D. Confidential information.
Proprietary business information contained in the application
form described in section 2912-D and the written notice
described in section 2916-D, as well as information concerning
the identity of a qualified tenant, are confidential and may not
be disclosed to the public. The department may disclose the name
of a computer data center that has been certified under this
article.
Section 2920-D. List of tenants.
An owner or operator of a computer data center shall provide,
to the extent permissible under Federal law, the department with
a list of qualified tenants, including the commencement and
expiration dates of each qualified tenant's agreement to use or
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occupy part of the computer data center. The list shall be
provided to the department annually, upon request by the
department.
Section 2921-D. Sale or transfer.
Except as provided in section 2917-D, a computer data center
retains its certification regardless of a transfer, sale or
other disposition, directly or indirectly, of the computer data
center.
Section 2922-D. Application.
(a) General rule.--An owner, operator or qualified tenant
may apply for a tax refund under this article on or before July
30, 2017, and each July 30 thereafter.
(b) Notification.--No later than September 30, 2017, and
each September 30 thereafter, the department shall notify each
applicant of the amount of tax refund approved by the
department.
Section 2923-D. Limitations.
(a) Total.--The total amount of State tax refunds approved
by the department under this article shall not exceed $7,000,000
in any fiscal year.
(b) Allocation.--If the total amount of tax refunds approved
for all applicants exceeds the limitation on the amount of tax
refunds in subsection (a) in a fiscal year, the tax refund to be
received by each applicant shall be determined as follows:
(1) Divide:
(i) the tax refund approved for the applicant; by
(ii) the total of all tax refunds approved for all
applicants.
(2) Multiply:
(i) the amount under subsection (a); by
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(ii) the quotient under paragraph (1).
(3) The algebraic form of the calculation under this
subsection is:
Taxpayer's tax refund = amount allocated for those
tax refunds X (tax refund approved for the
applicant/total of all tax refunds approved for all
applicants).
Section 2924-D. Applicability.
Notwithstanding any other provision of this article, the
department may not issue a tax refund under this subarticle for
the tax imposed upon the sale at retail or use of computer data
center equipment purchased after December 31, 2021.
SUBARTICLE C
SALES AND USE TAX EXEMPTION PROGRAM
Section 2931-D. Sales and use tax exemption.
(a) Sales and use tax.--Beginning January 1, 2022, the tax
imposed under Article II shall not be imposed upon the sale at
retail or use of computer data center equipment purchased for
installation in a certified computer data center, if purchased
by any of the following:
(1) An owner or operator of a computer data center
certified under this subarticle.
(2) A qualified tenant of a computer data center
certified under this subarticle.
(b) Applicability.--A tax exemption approved under this
subarticle shall apply during the qualification period as
provided under section 2942-D.
(c) Exclusions.--The following shall not qualify for a tax
exemption:
(1) A telecommunications provider's computer data center
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that does not have retail or wholesale customers being billed
or paying for services and does provide a majority of
services for internal use or use by the telecommunications
provider's subsidiaries.
(2) Computer data center equipment used by the certified
computer data center for any of the following purposes:
(i) Generating electricity for resale purposes to a
power utility.
(ii) Generating, providing or selling more than 5%
of its electricity outside of the certified computer data
center.
(iii) Proof of work crypto-asset mining.
(3) Laptop computers, handheld devices and motor
vehicles for use both inside and outside the computer data
center.
(d) Definition.--As used in this section, the term
"qualification period" shall mean the following:
(1) With respect to the owner or operator of a computer
data center certified under this article, a period of time
beginning on the date of certification of the computer data
center and expiring at the end of the 25th full calendar year
following the calendar year in which the owner or operator
filed an application for certification.
(2) With respect to a qualified tenant of the owner or
operator of a computer data center certified under this
article, a period of time beginning on the date that the
qualified tenant enters into an agreement concerning the use
or occupancy of the computer data center and expiring at the
earlier of the expiration of the term of the agreement or the
end of the 10th full calendar year following the calendar
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year in which the qualified tenant enters into the agreement.
Section 2932-D. Application for certification.
(a) Application.--To be considered for a certification, an
owner or operator of a computer data center shall submit to the
department an application on a form prescribed by the department
that includes all of the following:
(1) The owner's or operator's name, address and
telephone number.
(2) The address of the site where the computer data
center is or will be located, including, if applicable,
information sufficient to identify the specific portion of a
facility comprising the computer data center.
(3) An affirmation, signed by an authorized executive
representing the owner or operator, that the computer data
center is expected to satisfy the certification requirements
prescribed under section 2935-D.
(b) Acceptance.--The department shall begin accepting
applications no later than 60 days after the effective date of
this section.
(c) Compliance in reporting.--An owner or operator or
qualified tenant eligible for a certification shall comply with
all reporting, filing and compliance requirements under this
act.
(d) Compliance in tax laws.--No owner or operator or
qualified tenant may receive a certification under this
subarticle unless that owner or operator or qualified tenant is
in full compliance with all State tax laws.
Section 2933-D. Review of application.
(a) General rule.--Within 60 days after receiving a complete
and correct application, the department shall review the
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application and either issue a written certification that the
computer data center qualifies for the certification or provide
written reasons for its denial.
(b) Deemed approval.--Failure of the department to approve
or deny an application that has been acknowledged as received by
the department within 60 days after the date the owner or
operator of a computer data center submits the application to
the department shall constitute certification of the computer
data center, and the department shall issue written
certification to the owner or operator within 14 days.
Section 2934-D. Separation of facilities.
(a) Separate certification.--An owner or operator of a
computer data center may separate a facility into one or more
computer data centers, which may each receive a separate
certification, if each computer data center individually meets
the requirements prescribed in section 2935-D.
(b) Limitation.--A portion of a facility or an article of
computer data equipment shall not be deemed to be a part of more
than one computer data center for certification under this
subarticle.
(c) Aggregation.--An owner or operator may aggregate one or
more parcels, buildings or condominiums in a facility into a
single computer data center for certification under this
subarticle if, in the aggregate, the parcels, buildings and
condominiums meet the requirements prescribed in section 2935-D.
Section 2935-D. Eligibility requirements.
(a) General rule.--In order to be certified under this
subarticle, an owner or operator of a computer data center must
meet all of the following requirements:
(1) On or before the fourth anniversary of
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certification, the combined investment, in the aggregate, of
the owner or operator or qualified tenant of the computer
data center must total a minimum of any of the following:
(i) At least $75,000,000 of new investment if the
computer data center is located in a county with a
population of 250,000 or fewer individuals and creates 25
new jobs.
(ii) At least $100,000,000 of new investment if the
computer data center is located in a county with a
population of more than 250,000 individuals and creates
45 new jobs.
(2) On or before the fourth anniversary of
certification, the owner or operator or qualified tenant of a
computer data center, in the aggregate, must pay annual
compensation of at least $1,000,000 to employees at the
certified computer data center site for each year of the
certification after the fourth anniversary of certification.
(b) Prior applications.--A computer data center that has met
the eligibility requirements as prescribed under section 2915-D
and has, prior to July 1, 2021, been certified under section
2913-D shall be deemed to meet the certification requirements of
this section. The certification shall not be revoked, except as
provided under section 2917-D, and shall remain in effect for
the remainder of the qualification period, as defined in section
2931-D(d).
(c) Limitation.--The department may not certify any computer
data center under this subarticle after December 31, 2032.
(d) Definition.--As used in this section, the term "new
investment" means construction, expansion or build out of data
center space at either a new or an existing computer data center
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on or after January 1, 2022, and the purchase and installation
of computer data center equipment, except for items described
under paragraph (4) of the definition of "computer data center
equipment" in section 2901-D.
Section 2936-D. Notification and records.
(a) Requirements satisfied.--On or before the fourth
anniversary of the certification of a computer data center, the
owner or operator of the computer data center shall notify the
department in writing whether the computer data center for which
the certification is requested has satisfied the requirements
prescribed under section 2935-D.
(b) Records.--The owner or operator or qualified tenant
shall:
(1) Maintain detailed records of all investments created
by the computer data center, including costs of buildings and
computer data center equipment and all tax exemptions
received by the owner or operator or qualified tenant.
(2) Maintain purchase journals for examination by the
department.
Section 2937-D. Revocation of certification.
(a) Revocation.--If the department determines that the
requirements of section 2935-D have not been satisfied, the
department may revoke the certification of a computer data
center.
(b) Appeal.--The owner or operator of the computer data
center may appeal the revocation. Appeals filed under this
section shall be governed by Article II.
(c) Recapture.--If certification is revoked under this
section, the qualification period, as defined in section 2931-
D(d), of any owner or operator or qualified tenant of the
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computer data center shall expire and the department may
recapture from the owner or operator or qualified tenant all or
part of the tax exemption received by the owner or operator or
qualified tenant under section 2942-D. The department may give
special consideration or allow a temporary exemption from
recapture of the tax exemption if there is extraordinary
hardship due to factors beyond the control of the owner or
operator or qualified tenant. The department may require the
owner or operator or qualified tenant to file appropriate
amended tax returns in order to reflect any recapture of the tax
exemption.
(d) Limitation on assessment.--Notwithstanding the
limitation on assessment and collection in section 258, the
department shall assess any tax determined not to be properly
exempted under this subarticle within five years from the date
an owner or operator or qualified tenant of a computer data
center purchases property exempt from a tax. A taxpayer may
consent to an extension of the period as set forth in section
261.
Section 2938-D. Guidelines.
The department shall publish guidelines and prescribe forms
and procedures as necessary for the purposes of this article.
Section 2939-D. Confidential information.
Proprietary business information contained in the application
form described under section 2932-D and the written notice
described under section 2936-D, as well as information
concerning the identity of a qualified tenant, shall be
confidential and may not be disclosed to the public. The
department may disclose the name of a computer data center that
has been certified under this subarticle.
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Section 2940-D. List of tenants.
An owner or operator of a certified computer data center
shall provide, to the extent permissible under Federal law, the
department with a list of qualified tenants, including the
commencement and expiration dates of each qualified tenant's
agreement to use or occupy part of the certified computer data
center. The list shall be provided to the department annually,
upon request by the department.
Section 2941-D. Sale or transfer.
Except as provided under section 2937-D, a computer data
center retains its certification regardless of a transfer, sale
or other disposition, directly or indirectly, of the computer
data center.
Section 2942-D. Certificate of exemption.
(a) General rule.--A qualified owner or operator or
qualified tenant of a computer data center certified under this
subarticle may submit for a sales and use tax certificate of
exemption in a manner prescribed by the department on or before
October 1, 2021, and renew each October 1 thereafter. The
following shall apply:
(1) The owner or operator or qualified tenant of a
certified computer data center eligible for a sales and use
tax certificate of exemption shall comply with all reporting,
filing and compliance requirements under this act.
(2) No owner or operator or qualified tenant may receive
a sales and use tax certificate of exemption under this
subarticle unless that owner or operator or qualified tenant
is in full compliance with all State tax laws.
(b) Notification.--No later than 60 days after the
submission under subsection (a) for a sales and use tax
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certificate of exemption, the department shall issue a sales and
use tax certificate of exemption to each applicant approved by
the department.
(c) Exempt purchases.--The owner or operator or qualified
tenant of a certified computer data center shall prepare and
deliver a properly executed sales and use tax certificate of
exemption to a vendor from which the owner or operator or
qualified tenant purchases exempt computer data center
equipment.]
Section 3.4. The act is amended by adding a section to read:
Section 3003.26. Data Centers.--(a) Unless certified under
Article XXIX-D prior to February 3, 2026, a computer data center
shall not be eligible for tax benefits under Article XVIII-C or
XIX-B or the act of October 6, 1998 (P.L.705, No.92), known as
the Keystone Opportunity Zone, Keystone Opportunity Expansion
Zone and Keystone Opportunity Improvement Zone Act.
(b) As used in this section, the following words and phrases
shall have the meanings given to them in this subsection unless
the context clearly indicates otherwise:
"Computer data center." All or part of a facility that may
be composed of one or more businesses, owners or tenants, that
is or will be predominantly used to house working servers or
similar data storage systems and that may have uninterruptible
energy supply or generator backup power, or both, cooling
systems, towers and other temperature control infrastructure.
Section 4. Repeals are as follows:
(1) The General Assembly declares that the repeal under
paragraph (2) is necessary to effectuate the addition of
section 1101(a.2) of the act.
(2) Section 6 of the act of November 29, 2004 (P.L.1376,
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No.178), known as the Alternative Fuels Incentive Act, is
repealed.
(3) The General Assembly declares that the repeal under
paragraph (4) is necessary to effectuate the addition of
Article XVII-F of the act.
(4) Article XX-B of the act of March 10, 1949 (P.L.30,
No.14), known as the Public School Code of 1949, is repealed.
Section 5. The addition of section 1101(a.2) of the act is a
continuation of section 6 of the act of November 29, 2004
(P.L.1376, No.178), known as the Alternative Fuels Incentive
Act. Except as provided in section 1101(a.2) of the act, all
activities initiated under section 6 of the Alternative Fuels
Incentive Act shall continue and remain in full force and effect
and may be completed under section 1101(a.2) of the act. Orders,
regulations, rules and decisions which were made under section 6
of the Alternative Fuels Incentive Act and which are in effect
on the effective date of section 4 of this act shall remain in
full force and effect until revoked, vacated or modified under
section 1101(a.2) of the act. Contracts, obligations and
collective bargaining agreements entered into under section 6 of
the Alternative Fuels Incentive Act are not affected nor
impaired by the repeal of section 6 of the Alternative Fuels
Incentive Act.
Section 5.1. The addition of Article XVII-F of the act is a
continuation of Article XX-B of the act of March 10, 1949
(P.L.30, No.14), known as the Public School Code of 1949. Except
as otherwise provided in Article XVII-F of the act, all
activities initiated under Article XX-B of the Public School
Code of 1949 shall continue and remain in full force and effect
and may be completed under Article XVII-F of the act. Orders,
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regulations, rules and decisions which were made under Article
XX-B of the Public School Code of 1949 and which are in effect
on the effective date of section 4 of this act shall remain in
full force and effect until revoked, vacated or modified under
Article XVII-F of the act. Contracts, obligations and collective
bargaining agreements entered into under Article XX-B of the
Public School Code of 1949 are not affected nor impaired by the
repeal of Article XX-B of the Public School Code of 1949.
Section 6. The following shall apply:
(1) The amendment of sections 1101(b) and 1101.2 of the
act and paragraph (2) are intended to eliminate the tax
imposed upon each dollar of the gross receipts received from
the sales of electric energy for fiscal years beginning after
June 30, 2026.
(2) Notwithstanding any other provision of law, for
fiscal years beginning after June 30, 2026, a tax shall not
be imposed under 66 Pa.C.S. § 2810 upon each dollar of the
gross receipts received from the sales of electric energy.
The elimination of the taxes imposed under 66 Pa.C.S. § 2810
upon each dollar of the gross receipts received from the
sales of electric energy shall derive to the benefit of the
consumer purchasing services from the entities. The benefit
shall be provided in the form of the elimination of or a
reduction in the State tax surcharge. Failure to pass through
the elimination or reduction to the consumer shall subject
the entity to a civil penalty of at least $1,000, but not
more than $5,000, and additional relief as the court may deem
appropriate.
(3) The amendment of section 1101(b) and 1101.2 of the
act and paragraph (2) shall apply retroactively to July 1,
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2026.
Section 7. This act shall take effect as follows:
(1) The addition of section 1101(a.2) and Article XVII-F
of the act shall take effect July 1, 2026, or immediately,
whichever is later.
(2) Sections 4, 5 and 5.1 of this act shall take effect
July 1, 2026, or immediately, whichever is later.
(3) The remainder of this act shall take effect
immediately.
AMENDING THE ACT OF MARCH 4, 1971 (P.L.6, NO.2), ENTITLED "AN
ACT RELATING TO TAX REFORM AND STATE TAXATION BY CODIFYING
AND ENUMERATING CERTAIN SUBJECTS OF TAXATION AND IMPOSING
TAXES THEREON; PROVIDING PROCEDURES FOR THE PAYMENT,
COLLECTION, ADMINISTRATION AND ENFORCEMENT THEREOF; PROVIDING
FOR TAX CREDITS IN CERTAIN CASES; CONFERRING POWERS AND
IMPOSING DUTIES UPON THE DEPARTMENT OF REVENUE, CERTAIN
EMPLOYERS, FIDUCIARIES, INDIVIDUALS, PERSONS, CORPORATIONS
AND OTHER ENTITIES; PRESCRIBING CRIMES, OFFENSES AND
PENALTIES," IN SALES AND USE TAX, FURTHER PROVIDING FOR
EXCLUSIONS FROM TAX; IN CORPORATE NET INCOME TAX, FURTHER
PROVIDING FOR DEFINITIONS, FOR DETERMINATION OF NET LOSS
DEDUCTION, FOR IMPOSITION OF TAX, FOR REPORTS AND PAYMENT OF
TAX, FOR TIMELY MAILING TREATED AS TIMELY FILING AND PAYMENT
AND FOR ADDITIONAL WITHHOLDING REQUIREMENTS, REPEALING
PROVISIONS RELATING TO CONSOLIDATED REPORTS, FURTHER
PROVIDING FOR EXTENSION OF TIME TO FILE REPORTS, FOR CHANGES
MADE BY FEDERAL GOVERNMENT, FOR LIMITATIONS ON ASSESSMENTS,
FOR DEFINITIONS, FOR MANUFACTURING INNOVATION AND
REINVESTMENT DEDUCTION, FOR ENFORCEMENT, RULES AND
REGULATIONS AND INQUISITORIAL POWERS OF THE DEPARTMENT, FOR
RETENTION OF RECORDS AND FOR PENALTIES; IN GROSS RECEIPTS
TAX, FURTHER PROVIDING FOR IMPOSITION OF TAX AND PROVIDING
FOR DEFINITIONS; IN TAX CREDIT AND TAX BENEFIT
ADMINISTRATION, PROVIDING FOR APPLICATION OF TAX CREDITS OR
TAX BENEFITS TO A UNITARY BUSINESS; PROVIDING FOR EDUCATION
TAX CREDITS AND FOR EDUCATION OPTIONS TAX CREDITS; IN
MANUFACTURING AND INVESTMENT TAX CREDIT, FURTHER PROVIDING
FOR BUSINESS FIRMS AND FOR TAX CREDIT CERTIFICATES; PROVIDING
FOR RETURN ON EQUITY AND FOR SERVICE AND FACILITIES;
REPEALING PROVISIONS RELATING TO COMPUTER DATA CENTER
EQUIPMENT INCENTIVE PROGRAM; PROVIDING FOR ADDITIONAL
PROPERTY TAX REBATE; IN GENERAL PROVISIONS, PROVIDING FOR
DATA CENTERS; AND, IN GENERAL PROVISIONS, FURTHER PROVIDING
FOR ESTIMATED TAX, FOR UNDERPAYMENT OF ESTIMATED TAX AND FOR
RESTATEMENT OF TAX LIABILITY UNDER TREATIES AND PROVIDING FOR
DATA CENTERS.
THE GENERAL ASSEMBLY OF THE COMMONWEALTH OF PENNSYLVANIA
HEREBY ENACTS AS FOLLOWS:
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SECTION 1. SECTION 204(58) OF THE ACT OF MARCH 4, 1971
(P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, IS AMENDED
AND THE SECTION IS AMENDED BY ADDING A CLAUSE TO READ:
SECTION 204. EXCLUSIONS FROM TAX.--THE TAX IMPOSED BY
SECTION 202 SHALL NOT BE IMPOSED UPON ANY OF THE FOLLOWING:
* * *
(58) THE SALE AT RETAIL OR USE OF A PERSONAL COMPUTER, A
TABLET, A PERSONAL DIGITAL ASSISTANT, A PERIPHERAL DEVICE OR AN
INTERNET ACCESS DEVICE, OR A SERVICE CONTRACT OR SINGLE-USER
LICENSED SOFTWARE PURCHASED IN CONJUNCTION WITH A PERSONAL
COMPUTER, TABLET, PERSONAL DIGITAL ASSISTANT, PERIPHERAL DEVICE
OR INTERNET ACCESS DEVICE, WITH A SALES PRICE OF NOT MORE THAN
ONE THOUSAND FIVE HUNDRED DOLLARS ($1,500), DURING THE EXCLUSION
PERIOD BY AN INDIVIDUAL PURCHASER FOR NONBUSINESS USE. THE
EXCLUSION DOES NOT INCLUDE A SALE AT RETAIL OR USE OF, LEASING,
RENTAL OR REPAIR OF A PERSONAL COMPUTER, TABLET, PERSONAL
DIGITAL ASSISTANT, PERIPHERAL DEVICE OR INTERNET ACCESS DEVICE;
MAINFRAME COMPUTERS; NETWORK SERVERS; LOCAL AREA NETWORK HUBS;
ROUTERS AND NETWORK CABLING; NETWORK OPERATING SYSTEMS;
MULTIPLE-USER LICENSED SOFTWARE; MINICOMPUTERS; [HAND-HELD
COMPUTERS; PERSONAL DIGITAL ASSISTANTS WITHOUT INTERNET ACCESS;]
HARDWARE WORD PROCESSORS; GRAPHICAL CALCULATORS; VIDEO GAME
CONSOLES; TELEPHONES; DIGITAL CAMERAS; PAGERS; COMPACT DISCS
ENCODED WITH MUSIC OR MOVIES; AND DIGITAL VERSATILE DISCS
ENCODED WITH MUSIC OR MOVIES. FOR PURPOSES OF THIS CLAUSE, THE
PHRASE "EXCLUSION PERIOD" MEANS THE PERIOD OF TIME FROM [AUGUST
5, 2001, TO AND INCLUDING AUGUST 12, 2001, AND FROM FEBRUARY 17,
2002, TO AND INCLUDING FEBRUARY 24, 2002.] THE FIRST SATURDAY IN
AUGUST TO AND INCLUDING THE THIRD SATURDAY IN AUGUST. FOR
PURPOSES OF THIS CLAUSE, "PURCHASER" MEANS AN INDIVIDUAL WHO
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PLACES AN ORDER AND PAYS THE PURCHASE PRICE BY CASH OR CREDIT
DURING THE EXCLUSION PERIOD EVEN IF DELIVERY TAKES PLACE AFTER
THE EXCLUSION PERIOD.
* * *
(77) THE SALE AT RETAIL OR USE OF SCHOOL SUPPLIES DURING THE
EXCLUSION PERIOD FOR NONBUSINESS PURPOSES. FOR THE PURPOSES OF
THIS CLAUSE:
(I) THE FOLLOWING TERMS OR PHRASES SHALL HAVE THE FOLLOWING
MEANINGS:
"ART SUPPLIES" SHALL MEAN CLAY AND GLAZES, PAINTS,
PAINTBRUSHES, SKETCH AND DRAWING PADS AND WATERCOLORS.
"EXCLUSION PERIOD" SHALL MEAN THE FIRST SATURDAY IN AUGUST TO
AND INCLUDING THE THIRD SATURDAY IN AUGUST.
"INSTRUCTIONAL MATERIALS" SHALL MEAN REFERENCE BOOKS,
REFERENCE MAPS AND GLOBES, TEXTBOOKS AND WORKBOOKS.
"SCHOOL SUPPLIES" SHALL MEAN ITEMS SUCH AS BOOK BAGS, PENS,
PENCILS, PENCIL SHARPENERS, MARKERS, HIGHLIGHTERS, ERASERS,
CRAYONS, BLACKBOARD CHALK, NOTEBOOKS, BINDERS, FOLDERS, PAPER,
INDEX CARDS, GLUE, TAPE, RULERS, SCISSORS, STAPLERS, STAPLES,
PAPER CLIPS, PRINTER INK, CALCULATORS, COMPASSES, PROTRACTORS,
LUNCH BOXES, SCHOOL SUPPLY BOXES, PERSONAL ORGANIZERS, ART
SUPPLIES, CLIPBOARDS, DRY ERASE MARKERS, STICKY NOTES, BULLETIN
BOARD PAPER, EDUCATIONAL POSTERS AND GAMES AND INSTRUCTIONAL
MATERIALS WITH A SALES PRICE OF FIFTY DOLLARS ($50) OR LESS PER
ITEM.
(II) THE DEPARTMENT MAY DEVELOP WRITTEN GUIDELINES TO
INCLUDE OTHER SIMILAR ITEMS IN THE DEFINITIONS OF "ART
SUPPLIES," "INSTRUCTIONAL MATERIALS" AND "SCHOOL SUPPLIES" UNDER
THIS CLAUSE.
SECTION 2. SECTION 401(3)1(A) AND (B), (3)2(A)(17)(E) AND
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(5) OF THE ACT ARE AMENDED, (3)1 AND 4 ARE AMENDED BY ADDING A
PHRASES, (3)1(T) IS AMENDED BY ADDING A PARAGRAPH, (3)2(A)(1) IS
AMENDED BY ADDING A SUBPARAGRAPH, (3)2(A)(9)(A) IS AMENDED BY
ADDING A UNIT AND THE SECTION IS AMENDED BY ADDING CLAUSES TO
READ:
SECTION 401. DEFINITIONS.--THE FOLLOWING WORDS, TERMS, AND
PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANING
ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT
CLEARLY INDICATES A DIFFERENT MEANING:
* * *
(3) "TAXABLE INCOME." 1. (A) IN CASE THE ENTIRE BUSINESS
OF THE CORPORATION IS TRANSACTED WITHIN THIS COMMONWEALTH, FOR
ANY TAXABLE YEAR WHICH BEGINS ON OR AFTER JANUARY 1, 1971,
TAXABLE INCOME FOR THE CALENDAR YEAR OR FISCAL YEAR AS RETURNED
TO AND ASCERTAINED BY THE FEDERAL GOVERNMENT BEFORE SPECIAL
DEDUCTIONS PROVIDED FOR IN 26 U.S.C. CH. 1 SUBCH. B PT. VIII
(RELATING TO SPECIAL DEDUCTIONS FOR CORPORATIONS), NOT INCLUDING
THE DEDUCTIONS PROVIDED FOR IN 26 U.S.C. § 243 (RELATING TO
DIVIDENDS RECEIVED BY CORPORATIONS), OR IN THE CASE OF A
CORPORATION PARTICIPATING IN THE FILING OF CONSOLIDATED RETURNS
TO THE FEDERAL GOVERNMENT OR THAT IS NOT REQUIRED TO FILE A
RETURN WITH THE FEDERAL GOVERNMENT, THE TAXABLE INCOME WHICH
WOULD HAVE BEEN RETURNED TO AND ASCERTAINED BY THE FEDERAL
GOVERNMENT BEFORE SPECIAL DEDUCTIONS PROVIDED FOR IN 26 U.S.C.
CH. 1 SUBCH. B PT. VIII, NOT INCLUDING THE DEDUCTIONS PROVIDED
FOR IN 26 U.S.C. § 243, IF SEPARATE RETURNS HAD BEEN MADE TO THE
FEDERAL GOVERNMENT FOR THE CURRENT AND PRIOR TAXABLE YEARS,
SUBJECT, HOWEVER, TO ANY CORRECTION THEREOF, FOR FRAUD, EVASION,
OR ERROR AS FINALLY ASCERTAINED BY THE FEDERAL GOVERNMENT.
(B) ADDITIONAL DEDUCTIONS SHALL BE ALLOWED FROM TAXABLE
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INCOME ON ACCOUNT OF ANY DIVIDENDS RECEIVED FROM ANY OTHER
CORPORATION BUT ONLY TO THE EXTENT THAT SUCH DIVIDENDS ARE
INCLUDED IN TAXABLE INCOME AS RETURNED TO AND ASCERTAINED BY THE
FEDERAL GOVERNMENT. FOR TAX YEARS BEGINNING ON OR AFTER JANUARY
1, 1991, ADDITIONAL DEDUCTIONS SHALL ONLY BE ALLOWED FOR AMOUNTS
INCLUDED, UNDER [SECTION 78 OF THE INTERNAL REVENUE CODE OF 1986
(PUBLIC LAW 99-514, 26 U.S.C. § 78)] 26 U.S.C. § 78 (RELATING TO
GROSS UP FOR DEEMED PAID FOREIGN TAX CREDIT), IN TAXABLE INCOME
RETURNED TO AND ASCERTAINED BY THE FEDERAL GOVERNMENT AND FOR
THE AMOUNT OF ANY DIVIDENDS RECEIVED FROM A FOREIGN CORPORATION
INCLUDED IN TAXABLE INCOME TO THE EXTENT SUCH DIVIDENDS WOULD BE
DEDUCTIBLE IN ARRIVING AT FEDERAL TAXABLE INCOME IF RECEIVED
FROM A DOMESTIC CORPORATION. FOR TAXABLE YEARS BEGINNING AFTER
DECEMBER 31, 2026, THE ADDITIONAL DEDUCTION WITH RESPECT TO
DIVIDENDS SHALL NOT BE ALLOWED FOR DIVIDENDS BETWEEN MEMBERS OF
A UNITARY BUSINESS.
* * *
(P.1) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2026,
IN THE CASE OF A CORPORATION THAT IS A MEMBER OF A UNITARY
BUSINESS, THE TERM "TAXABLE INCOME" SHALL MEAN THE COMBINED
UNITARY INCOME OF THE UNITARY BUSINESS, AS DETERMINED ON A
WATER'S-EDGE BASIS, PLUS THE CORPORATION'S NONBUSINESS INCOME.
* * *
(T) * * *
(5) THE ADJUSTMENT REQUIRED UNDER PARAGRAPH (1) SHALL NOT
APPLY TO A TRANSACTION BETWEEN THE TAXPAYER AND AN AFFILIATED
ENTITY IF THE TAXPAYER AND THE AFFILIATED ENTITY FILE AS PART OF
THE SAME COMBINED ANNUAL REPORT IN THIS STATE.
* * *
2. IN CASE THE ENTIRE BUSINESS OF ANY CORPORATION, OTHER
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THAN A CORPORATION ENGAGED IN DOING BUSINESS AS A REGULATED
INVESTMENT COMPANY AS DEFINED BY THE INTERNAL REVENUE CODE OF
1986, IS NOT TRANSACTED WITHIN THIS COMMONWEALTH, THE TAX
IMPOSED BY THIS ARTICLE SHALL BE BASED UPON SUCH PORTION OF THE
TAXABLE INCOME OF SUCH CORPORATION FOR THE FISCAL OR CALENDAR
YEAR, AS DEFINED IN SUBCLAUSE 1 HEREOF, AND MAY BE DETERMINED AS
FOLLOWS:
(A) DIVISION OF INCOME.
(1) AS USED IN THIS DEFINITION, UNLESS THE CONTEXT OTHERWISE
REQUIRES:
* * *
(E.1) NOTWITHSTANDING SUBPARAGRAPH (E), IN REGARD TO THE
SALE, REDEMPTION, MATURITY OR EXCHANGE OF SECURITIES, HELD BY
THE TAXPAYER PRIMARILY FOR SALE TO CUSTOMERS IN THE ORDINARY
COURSE OF ITS TRADE OR BUSINESS, SALES SHALL ONLY INCLUDE THE
NET GAINS, EQUAL TO ZERO OR ABOVE, RECEIVED BY THE TAXPAYER.
* * *
(9) (A) EXCEPT AS PROVIDED IN SUBPARAGRAPH (B):
* * *
(VI) (A) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31,
2026, THE COMBINED UNITARY INCOME OF A UNITARY BUSINESS, AS
DETERMINED ON A WATER'S-EDGE BASIS, SHALL BE APPORTIONED TO THIS
STATE BY MULTIPLYING SAID INCOME BY THE MEMBER'S SALES FACTOR,
THE NUMERATOR OF WHICH SHALL BE THE MEMBER'S TOTAL SALES IN THIS
STATE DURING THE TAX PERIOD, AND THE DENOMINATOR OF WHICH SHALL
BE THE COMBINED TOTAL SALES OF ALL MEMBERS OF THE UNITARY
BUSINESS EVERYWHERE DURING THE TAX PERIOD. IN COMPUTING THE
SALES OF EACH MEMBER FOR PURPOSES OF APPORTIONMENT, THE
FOLLOWING SALES ARE EXCLUDED FROM THE NUMERATOR AND DENOMINATOR:
(I) SALES FROM TRANSACTIONS BETWEEN OR AMONG MEMBERS OF THE
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UNITARY BUSINESS THAT ARE DEFERRED UNDER 26 CFR 1.1502-13
(RELATING TO INTERCOMPANY TRANSACTIONS) FOR FEDERAL TAXABLE
INCOME PURPOSES; AND
(II) THE SALES OF EACH MEMBER THAT ARE EXCLUDED FROM THE
UNITARY BUSINESS PURSUANT TO THE DEFINITION OF WATER'S-EDGE
BASIS.
(B) THE PENNSYLVANIA SALES OF EACH NONTAXABLE MEMBER SHALL
BE DETERMINED BASED UPON THE APPORTIONMENT RULES APPLICABLE TO
THE MEMBER AND SHALL BE AGGREGATED. EACH TAXABLE MEMBER OF THE
UNITARY BUSINESS SHALL INCLUDE IN ITS SALES FACTOR NUMERATOR A
PORTION OF THE AGGREGATE PENNSYLVANIA SALES OF NONTAXABLE
MEMBERS DURING THE TAX PERIOD BASED ON A RATIO, THE NUMERATOR OF
WHICH IS THE TAXABLE MEMBER'S PENNSYLVANIA SALES DURING THE TAX
PERIOD AND THE DENOMINATOR OF WHICH IS THE AGGREGATE
PENNSYLVANIA SALES OF ALL THE TAXABLE MEMBERS OF THE UNITARY
BUSINESS DURING THE TAX PERIOD.
(C) NONBUSINESS INCOME OF EACH MEMBER OF A UNITARY BUSINESS
SHALL BE ALLOCATED AS PROVIDED IN PARAGRAPHS (5) THROUGH (8) OF
PHRASE (A) OF SUBCLAUSE 2 OF THIS DEFINITION.
(D) A MEMBER OF THE UNITARY BUSINESS SHALL BE SUBJECT TO TAX
ON ITS APPORTIONED SHARE OF THE COMBINED UNITARY INCOME OF THE
UNITARY BUSINESS, AS DETERMINED ON A WATER'S-EDGE BASIS, PLUS
ITS NONBUSINESS INCOME OR LOSS ALLOCATED TO THIS STATE, MINUS
THE MEMBER'S NET LOSS DEDUCTION, IF APPLICABLE.
(E) THE AGGREGATE OF ALL SUCH FINAL SUMS OF EACH MEMBER OF
THE UNITARY BUSINESS FROM PHRASE (D) SHALL CONSTITUTE THE
PORTION OF THE UNITARY BUSINESS'S INCOME SUBJECT TO THE TAX
IMPOSED BY THIS ARTICLE.
(F) (1) THE SECRETARY OF REVENUE MAY DISTRIBUTE, APPORTION
OR ALLOCATE GROSS INCOME, DEDUCTIONS, CREDITS OR ALLOWANCES
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BETWEEN AND AMONG TWO OR MORE CORPORATIONS, PERSONS, ENTITIES,
MEMBERS OR UNITARY BUSINESSES, WHETHER OR NOT INCORPORATED,
WHETHER OR NOT ORGANIZED IN THE UNITED STATES AND WHETHER OR NOT
AFFILIATED, IF:
(A) THE CORPORATIONS, PERSONS, ENTITIES, MEMBERS OR UNITARY
BUSINESSES ARE OWNED OR CONTROLLED DIRECTLY OR INDIRECTLY BY THE
SAME INTERESTS WITHIN THE MEANING OF 26 U.S.C. § 482 (RELATING
TO ALLOCATION OF INCOME AND DEDUCTIONS AMONG TAXPAYERS); AND
(B) THE SECRETARY OF REVENUE DETERMINES THAT THE
DISTRIBUTION, APPORTIONMENT OR ALLOCATION IS NECESSARY IN ORDER
TO REFLECT AN ARM'S LENGTH STANDARD WITHIN THE MEANING OF 26 CFR
1.482-1 (RELATING TO ALLOCATION OF INCOME AND DEDUCTIONS AMONG
TAXPAYERS) AND TO REFLECT CLEARLY THE INCOME OF THOSE
CORPORATIONS, PERSONS, ENTITIES, MEMBERS OR UNITARY BUSINESSES.
(2) THE SECRETARY OF REVENUE SHALL APPLY THE ADMINISTRATIVE
AND JUDICIAL INTERPRETATIONS OF 26 U.S.C. § 482 IN ADMINISTERING
THIS SECTION.
(G) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2026, ANY
MEMBER OF A UNITARY BUSINESS THAT WOULD OTHERWISE APPORTION ITS
SHARE OF THE COMBINED UNITARY INCOME OF THE UNITARY BUSINESS, AS
DETERMINED ON A WATER'S-EDGE BASIS, UNDER PHRASE (B), (C), (D)
OR (E) OF SUBCLAUSE 2 OF THIS DEFINITION SHALL INSTEAD USE A
SALES FACTOR AS DESCRIBED IN THIS SECTION.
* * *
(17) SALES, OTHER THAN SALES UNDER PARAGRAPHS (16) AND
(16.1), ARE IN THIS STATE AS FOLLOWS:
* * *
(E) [GROSS RECEIPTS] NET GAINS, EQUAL TO ZERO OR ABOVE, FROM
THE SALE, REDEMPTION, MATURITY OR EXCHANGE OF SECURITIES, HELD
BY THE TAXPAYER PRIMARILY FOR SALE TO CUSTOMERS IN THE ORDINARY
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COURSE OF ITS TRADE OR BUSINESS, IF THE CUSTOMERS ARE IN THIS
STATE.
* * *
4. * * *
(H) SUBJECT TO THE LIMITATIONS OF THIS SUBCLAUSE, ANY MEMBER
OF A UNITARY BUSINESS THAT HAS UNUSED NET LOSS FROM TAXABLE
YEARS THAT BEGAN PRIOR TO JANUARY 1, 2027, OR THAT GENERATES NET
LOSSES WHILE A MEMBER OF A UNITARY BUSINESS MAY ONLY TAKE THE
NET LOSS DEDUCTION FOR TAXABLE YEARS BEGINNING AFTER DECEMBER
31, 2026, TO THE EXTENT OF THE MEMBER'S SHARE OF TAXABLE INCOME
AFTER ALLOCATION AND APPORTIONMENT AND THE NET LOSSES MAY NOT BE
USED BY OTHER MEMBERS OF THE SAME UNITARY BUSINESS EXCEPT AS
OTHERWISE PERMITTED BY PHRASE (G) OF SUBCLAUSE 2 OF THIS
DEFINITION.
(I) ANY NET LOSS REALIZED FOR A TAXABLE YEAR UNUSED BY A
CORPORATION WHICH SUBSEQUENTLY BECOMES A MEMBER OF ANOTHER
UNITARY BUSINESS MAY ONLY BE USED BY THAT CORPORATION EXCEPT AS
OTHERWISE PERMITTED BY PHRASE (G) OF SUBCLAUSE 2 OF THIS
DEFINITION.
* * *
(5) "TAXABLE YEAR." [THE TAXABLE YEAR WHICH THE
CORPORATION, OR ANY CONSOLIDATED GROUP WITH WHICH THE
CORPORATION PARTICIPATES IN THE FILING OF CONSOLIDATED RETURNS,
ACTUALLY USES IN REPORTING TAXABLE INCOME TO THE FEDERAL
GOVERNMENT. WITH REGARD TO THE TAX IMPOSED BY ARTICLE IV OF THIS
ACT (RELATING TO THE CORPORATE NET INCOME TAX), THE TERMS
"ANNUAL YEAR," "FISCAL YEAR," "ANNUAL OR FISCAL YEAR," "TAX
YEAR" AND "TAX PERIOD" SHALL BE THE SAME AS THE CORPORATION'S
TAXABLE YEAR, AS DEFINED IN THIS PARAGRAPH.]
1. EXCEPT AS SET FORTH IN SUBCLAUSE 2, THE TAXABLE YEAR
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WHICH THE CORPORATION, OR ANY CONSOLIDATED GROUP WITH WHICH THE
CORPORATION PARTICIPATES IN THE FILING OF CONSOLIDATED RETURNS,
ACTUALLY USES IN REPORTING TAXABLE INCOME TO THE FEDERAL
GOVERNMENT, OR WHICH THE CORPORATION WOULD HAVE USED IN
REPORTING TAXABLE INCOME TO THE FEDERAL GOVERNMENT HAD IT BEEN
REQUIRED TO REPORT ITS TAXABLE INCOME TO THE FEDERAL GOVERNMENT.
WITH REGARD TO THE TAX IMPOSED BY ARTICLE IV, THE TERMS "ANNUAL
YEAR," "FISCAL YEAR," "ANNUAL OR FISCAL YEAR," "TAX YEAR" AND
"TAX PERIOD" SHALL BE THE SAME AS THE CORPORATION'S TAXABLE
YEAR, AS DEFINED IN THIS SUBCLAUSE OR SUBCLAUSE 2.
2. ALL MEMBERS OF A UNITARY BUSINESS SHALL HAVE A COMMON
TAXABLE YEAR FOR PURPOSES OF COMPUTING TAX DUE UNDER THIS
ARTICLE. THE TAXABLE YEAR SHALL BE THE COMMON TAXABLE YEAR
ADOPTED, IN A MANNER PRESCRIBED BY THE DEPARTMENT, BY ALL
MEMBERS OF THE UNITARY BUSINESS. THE COMMON TAXABLE YEAR MUST BE
USED BY ALL MEMBERS OF THE UNITARY BUSINESS IN THE YEAR OF
ADOPTION AND ALL FUTURE YEARS UNLESS OTHERWISE PERMITTED BY THE
DEPARTMENT.
* * *
(12) "TAX HAVEN." A JURISDICTION THAT DURING THE TAX YEAR
IN QUESTION:
1. HAS LAWS OR PRACTICES THAT PREVENT EFFECTIVE EXCHANGE OF
INFORMATION FOR TAX PURPOSES WITH OTHER GOVERNMENTS ON TAXPAYERS
BENEFITING FROM THE TAX REGIME;
2. HAS A TAX REGIME WHICH LACKS TRANSPARENCY;
3. FACILITATES THE ESTABLISHMENT OF FOREIGN-OWNED ENTITIES
WITHOUT THE NEED FOR A LOCAL SUBSTANTIVE PRESENCE OR PROHIBITS
THESE ENTITIES FROM HAVING ANY COMMERCIAL IMPACT ON THE LOCAL
ECONOMY;
4. EXPLICITLY OR IMPLICITLY EXCLUDES THE JURISDICTION'S
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RESIDENT TAXPAYERS FROM TAKING ADVANTAGE OF THE TAX REGIME
BENEFITS OR PROHIBITS ENTERPRISES THAT BENEFIT FROM THE REGIME
FROM OPERATING IN THE JURISDICTION'S DOMESTIC MARKET; OR
5. HAS CREATED A TAX REGIME WHICH IS FAVORABLE FOR TAX
AVOIDANCE, BASED UPON AN OVERALL ASSESSMENT OF RELEVANT FACTORS,
INCLUDING WHETHER THE JURISDICTION HAS A SIGNIFICANT UNTAXED
OFFSHORE FINANCIAL OR SERVICES SECTOR RELATIVE TO ITS OVERALL
ECONOMY.
(13) "UNITARY BUSINESS." A SINGLE ECONOMIC ENTERPRISE THAT
IS MADE UP OF SEPARATE PARTS OF A SINGLE CORPORATION, OF A
COMMONLY CONTROLLED GROUP OF CORPORATIONS, OR BOTH, THAT ARE
SUFFICIENTLY INTERDEPENDENT, INTEGRATED AND INTERRELATED THROUGH
THEIR ACTIVITIES SO AS TO PROVIDE A SYNERGY AND MUTUAL BENEFIT
THAT PRODUCES A SHARING OR EXCHANGE OF VALUE AMONG THEM AND A
FLOW OF VALUE TO THE SEPARATE PARTS. A UNITARY BUSINESS INCLUDES
ALL PARTS AND CORPORATIONS THAT ARE INCLUDED IN A UNITARY
BUSINESS UNDER THE CONSTITUTION OF THE UNITED STATES.
(14) "WATER'S-EDGE BASIS." A SYSTEM OF REPORTING THAT
INCLUDES THE INCOME AND APPORTIONMENT FACTORS OF CERTAIN MEMBERS
OF A UNITARY BUSINESS, DESCRIBED AS FOLLOWS:
1. ANY MEMBER INCORPORATED IN THE UNITED STATES OR FORMED
UNDER THE LAWS OF ANY STATE OF THE UNITED STATES, THE DISTRICT
OF COLUMBIA, ANY TERRITORY OR POSSESSION OF THE UNITED STATES OR
THE COMMONWEALTH OF PUERTO RICO.
2. ANY MEMBER, REGARDLESS OF THE PLACE INCORPORATED OR
FORMED, IF AT LEAST TWENTY PER CENT OF THE MEMBER'S SALES FACTOR
IS WITHIN THE UNITED STATES, AND THE FOLLOWING SHALL APPLY:
(A) FOR PURPOSES OF DETERMINING WHETHER AT LEAST TWENTY PER
CENT OF A MEMBER'S SALES FACTOR IS WITHIN THE UNITED STATES, THE
CALCULATION MUST BE PERFORMED ON A STAND-ALONE BASIS. SALES
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SHALL BE GROSS FIGURES WITHOUT ELIMINATIONS FOR TRANSACTIONS
WITH OTHER MEMBERS OF ANY UNITARY BUSINESS.
(B) WHETHER SALES ARE WITHIN THE UNITED STATES IS BASED ON
THE SALES FACTOR SOURCING RULES CONTAINED IN CLAUSE (3)2.
3. ANY MEMBER WHICH IS ONE OF THE FOLLOWING:
(A) A DOMESTIC INTERNATIONAL SALES CORPORATION AS DESCRIBED
IN 26 U.S.C. CH. 1 SUBCH. N PT. IV SUBPT. A (RELATING TO
TREATMENT OF QUALIFYING CORPORATIONS).
(B) A FOREIGN SALES CORPORATION AS DESCRIBED IN THE FORMER
26 U.S.C. §§ 921, 922, 923, 924, 925, 926 AND 927.
(C) AN EXPORT TRADE CORPORATION AS DESCRIBED IN 26 U.S.C.
CH. 1 SUBCH. N PT. III SUBPT. G (RELATING TO EXPORT TRADE
CORPORATIONS).
4. ANY MEMBER NOT DESCRIBED IN SUBCLAUSE 1, 2 OR 3 SHALL
INCLUDE THE PORTION OF THE MEMBER'S TAXABLE INCOME DERIVED FROM
OR ATTRIBUTABLE TO SOURCES WITHIN THE UNITED STATES, AS
DETERMINED UNDER 26 U.S.C. (RELATING TO INTERNAL REVENUE CODE)
WITHOUT REGARD TO FEDERAL TREATIES, AND ITS APPORTIONMENT
FACTORS RELATED THERETO.
5. ANY MEMBER THAT IS A "CONTROLLED FOREIGN CORPORATION" AS
DEFINED IN 26 U.S.C. § 957 (RELATING TO CONTROLLED FOREIGN
CORPORATIONS; UNITED STATES PERSONS), TO THE EXTENT THE INCOME
OF THAT MEMBER IS INCOME DEFINED IN 26 U.S.C. § 952 (RELATING TO
SUBPART F INCOME DEFINED) AS SUBPART F INCOME, NOT EXCLUDING
LOWER-TIER SUBSIDIARIES' DISTRIBUTIONS OF SUCH INCOME WHICH WERE
PREVIOUSLY TAXED, DETERMINED WITHOUT REGARD TO FEDERAL TREATIES,
AND THE APPORTIONMENT FACTORS RELATED TO THAT INCOME; ANY ITEM
OF INCOME RECEIVED BY A CONTROLLED FOREIGN CORPORATION AND THE
APPORTIONMENT FACTORS RELATED TO SUCH INCOME SHALL BE EXCLUDED
IF THE CORPORATION ESTABLISHES TO THE SATISFACTION OF THE
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SECRETARY OF REVENUE THAT SUCH INCOME WAS SUBJECT TO AN
EFFECTIVE RATE OF INCOME TAX IMPOSED BY A FOREIGN COUNTRY
GREATER THAN NINETY PER CENT OF THE MAXIMUM RATE OF TAX
SPECIFIED IN 26 U.S.C. § 11 (RELATING TO TAX IMPOSED). THE
EFFECTIVE RATE OF INCOME TAX DETERMINATION SHALL BE BASED UPON
THE METHODOLOGY UNDER 26 CFR 1.954-1 (RELATING TO FOREIGN BASE
COMPANY INCOME).
6. ANY MEMBER THAT IS INCORPORATED IN OR IS DOING BUSINESS
IN A TAX HAVEN UNLESS IT IS PROVEN TO THE SATISFACTION OF THE
SECRETARY THAT SUCH MEMBER IS INCORPORATED IN OR DOING BUSINESS
IN A TAX HAVEN FOR A LEGITIMATE BUSINESS PURPOSE.
(15) "COMMONLY CONTROLLED GROUP." FOR A CORPORATION, THE
CORPORATION IS A MEMBER OF A GROUP OF TWO OR MORE CORPORATIONS
AND MORE THAN FIFTY PER CENT OF THE VOTING STOCK OR CONTROLLING
INTEREST OF EACH MEMBER OF THE GROUP IS DIRECTLY OR INDIRECTLY
OWNED BY A COMMON OWNER OR BY COMMON OWNERS, EITHER CORPORATE OR
NONCORPORATE, OR BY ONE OR MORE OF THE MEMBER CORPORATIONS OF
THE GROUP.
(16) "COMBINED UNITARY INCOME." THE AGGREGATE SEPARATE
COMPANY TAXABLE INCOME OR LOSS OF ALL MEMBERS OF A UNITARY
BUSINESS SUBJECT TO APPORTIONMENT EXCEPT:
1. INCOME FROM AN INTERCOMPANY TRANSACTION BETWEEN MEMBERS
OF A UNITARY BUSINESS SHALL BE DEFERRED IN A MANNER SIMILAR TO
26 CFR 1.1502-13 FOR FEDERAL TAXABLE INCOME PURPOSES.
2. DIVIDENDS PAID BY ONE MEMBER OF A UNITARY BUSINESS TO
ANOTHER.
3. INCOME OF THE FOLLOWING CORPORATIONS IS NOT INCLUDED IN
THE DETERMINATION OF COMBINED UNITARY INCOME:
(A) ANY CORPORATION SUBJECT TO TAXATION UNDER ARTICLE VII,
VIII, IX OR XV;
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(B) ANY CORPORATION SPECIFIED IN THE DEFINITION OF
"INSTITUTION" IN SECTION 701.5 THAT WOULD BE SUBJECT TO TAXATION
UNDER ARTICLE VII, WERE IT DOING BUSINESS IN THIS COMMONWEALTH,
AS DEFINED IN SECTION 701.5;
(C) ANY CORPORATION COMMONLY KNOWN AS A TITLE INSURANCE
COMPANY THAT WOULD BE SUBJECT TO TAXATION UNDER ARTICLE VIII,
WERE IT INCORPORATED IN THIS STATE;
(D) ANY CORPORATION SPECIFIED AS AN INSURANCE COMPANY,
ASSOCIATION OR EXCHANGE IN ARTICLE IX THAT WOULD BE SUBJECT TO
TAXATION UNDER ARTICLE IX, WERE IT TRANSACTING INSURANCE
BUSINESS IN THIS STATE;
(E) ANY CORPORATION SPECIFIED IN THE DEFINITION OF
"INSTITUTION" IN SECTION 1501 THAT WOULD BE SUBJECT TO TAXATION
UNDER ARTICLE XV, WERE IT LOCATED, AS DEFINED IN SECTION 1501,
IN THIS STATE; OR
(F) ANY CORPORATION THAT HAS FILED A TIMELY ELECTION AND HAS
QUALIFIED TO BE TAXED AS A REGULATED INVESTMENT COMPANY UNDER
THE PROVISIONS OF THE INTERNAL REVENUE CODE OF 1954, AS AMENDED.
(17) "MEMBER." A CORPORATION THAT IS A MEMBER OF A UNITARY
BUSINESS. THE TERM DOES NOT INCLUDE A CORPORATION LISTED IN
CLAUSE (16)3.
(18) "TAXABLE MEMBER." A MEMBER WHICH WOULD BE SUBJECT TO
THE TAX IMPOSED BY THIS ARTICLE UNDER SECTION 402 ON A SEPARATE
ENTITY BASIS FOR EXERCISING, WHETHER IN ITS OWN NAME OR THROUGH
ANY PERSON, ASSOCIATION, BUSINESS TRUST, CORPORATION, JOINT
VENTURE, LIMITED LIABILITY COMPANY, LIMITED PARTNERSHIP,
PARTNERSHIP, MEMBER OR OTHER ENTITY, ANY OF THE PRIVILEGES
INCLUDED IN SECTION 402(A)(1), (2), (3), (4) AND (5).
(19) "NONTAXABLE MEMBER." A MEMBER WHICH IS NOT A TAXABLE
MEMBER.
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SECTION 3. SECTION 401.1 OF THE ACT IS AMENDED BY ADDING A
SUBSECTION TO READ:
SECTION 401.1. DETERMINATION OF NET LOSS DEDUCTION.--* * *
(F) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2026,
TAXPAYERS FILING COMBINED ANNUAL REPORTS MUST CALCULATE THE
AVAILABLE NET LOSS DEDUCTION ON A TAXABLE MEMBER BY TAXABLE
MEMBER BASIS IN ACCORDANCE WITH THE PROVISIONS OF SUBCLAUSE 4 OF
SECTION 401(3).
SECTION 4. SECTIONS 402(A) INTRODUCTORY PARAGRAPH AND (5)
(III) AND 403(C), (D) AND (F) OF THE ACT ARE AMENDED AND THE
SECTIONS ARE AMENDED BY ADDING SUBSECTIONS TO READ:
SECTION 402. IMPOSITION OF TAX.--(A) A CORPORATION SHALL BE
SUBJECT TO AND SHALL PAY AN EXCISE TAX FOR EXERCISING, WHETHER
IN ITS OWN NAME OR THROUGH ANY PERSON, ASSOCIATION, BUSINESS
TRUST, CORPORATION, JOINT VENTURE, LIMITED LIABILITY COMPANY,
LIMITED PARTNERSHIP, PARTNERSHIP, MEMBER OR OTHER ENTITY, ANY OF
THE FOLLOWING PRIVILEGES:
* * *
(5) * * *
(III) THERE SHALL BE A REBUTTABLE PRESUMPTION THAT A
CORPORATION, OR IN THE CONTEXT OF A UNITARY BUSINESS, A MEMBER
OF A UNITARY BUSINESS WITH $500,000 OR MORE OF SALES SOURCED IN
THE CURRENT TAX YEAR TO THIS COMMONWEALTH UNDER SECTION 401 HAS
SUBSTANTIAL NEXUS IN THIS COMMONWEALTH WITHOUT REGARD TO
PHYSICAL PRESENCE IN THIS COMMONWEALTH.
* * *
(D) FOR PURPOSES OF THIS SECTION, THE TERM "CORPORATION"
SHALL INCLUDE A UNITARY BUSINESS, EXCEPT WHERE THE CONTEXT
CLEARLY INDICATES A DIFFERENT MEANING.
SECTION 403. REPORTS AND PAYMENT OF TAX.--* * *
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(A.1) (1) EACH CORPORATION THAT IS A MEMBER OF A UNITARY
BUSINESS THAT CONSISTS OF TWO OR MORE CORPORATIONS, UNLESS
EXCLUDED BY THE PROVISIONS OF THIS ARTICLE, SHALL FILE AS PART
OF A COMBINED ANNUAL REPORT. THE MEMBERS OF THE UNITARY BUSINESS
SHALL DESIGNATE ONE MEMBER THAT IS SUBJECT TO TAX UNDER THIS
ARTICLE TO FILE THE COMBINED ANNUAL REPORT AND TO ACT AS AGENT
ON BEHALF OF ALL OTHER MEMBERS OF THE UNITARY BUSINESS. EACH
CORPORATION THAT IS A MEMBER OF A UNITARY BUSINESS SHALL BE
LIABLE FOR ITS TAX LIABILITY UNDER THIS ARTICLE. THE AGENT ALSO
SHALL BE LIABLE FOR THE AGGREGATE AMOUNT OF THE UNITARY
BUSINESS' TAX LIABILITY PURSUANT TO THIS ARTICLE.
(2) THE OATH OR AFFIRMATION OF THE DESIGNATED MEMBER'S
PRESIDENT, VICE PRESIDENT, TREASURER, ASSISTANT TREASURER OR
OTHER AUTHORIZED OFFICER SHALL CONSTITUTE THE OATH OR
AFFIRMATION OF EACH CORPORATION THAT IS A MEMBER OF THAT UNITARY
BUSINESS.
(3) THE DESIGNATED MEMBER SHALL TRANSMIT TO THE DEPARTMENT
UPON A FORM PRESCRIBED BY THE DEPARTMENT A COMBINED ANNUAL
REPORT UNDER OATH OR AFFIRMATION OF THE MEMBER'S PRESIDENT, VICE
PRESIDENT, TREASURER, ASSISTANT TREASURER OR OTHER AUTHORIZED
OFFICER.
(4) IN ADDITION TO THE INFORMATION REQUIRED IN SUBSECTION
(A), THE COMBINED ANNUAL REPORT SHALL SET FORTH:
(I) ALL MEMBERS INCLUDED IN THE UNITARY BUSINESS.
(II) ALL NECESSARY DATA, BOTH IN THE AGGREGATE AND FOR EACH
MEMBER OF THE UNITARY BUSINESS, THAT SETS FORTH THE
DETERMINATION OF TAX LIABILITY FOR EACH MEMBER OF THE UNITARY
BUSINESS.
(III) ANY OTHER INFORMATION THAT THE DEPARTMENT MAY REQUIRE.
(A.2) A MEMBER OF A UNITARY BUSINESS OF TWO OR MORE
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CORPORATIONS MUST DETERMINE THE MEMBER'S INCOME AND
APPORTIONMENT FACTORS ON A WATER'S-EDGE BASIS.
* * *
(B.1) IT SHALL BE THE DUTY OF EACH UNITARY BUSINESS LIABLE
TO PAY TAX UNDER THIS ARTICLE TO PAY ESTIMATED TAX UNDER SECTION
3003.2 AND TO MAKE FINAL PAYMENT OF TAX DUE FOR THE TAXABLE YEAR
WITH THE COMBINED ANNUAL REPORT REQUIRED BY THIS SECTION.
(C) THE AMOUNT OF ALL TAXES, IMPOSED UNDER THE PROVISIONS OF
THIS ARTICLE, NOT PAID ON OR BEFORE THE TIMES AS ABOVE PROVIDED,
SHALL BEAR INTEREST AS PROVIDED IN SECTION 806 OF THE ACT OF
APRIL 9, 1929 (P.L.343, NO.176), KNOWN AS "THE FISCAL CODE,"
FROM THE DATE THEY ARE DUE AND PAYABLE UNTIL PAID, EXCEPT THAT
IF THE TAXABLE INCOME HAS BEEN, OR IS INCREASED BY THE
COMMISSIONER OF INTERNAL REVENUE, OR BY ANY OTHER AGENCY OR
COURT OF THE UNITED STATES, INTEREST SHALL BE COMPUTED ON THE
ADDITIONAL TAX DUE FROM THIRTY DAYS AFTER THE CORPORATION
RECEIVES NOTICE OF THE CHANGE OF INCOME UNTIL PAID: PROVIDED,
HOWEVER, THAT ANY CORPORATION OR DESIGNATED MEMBER RESPONSIBLE
FOR FILING A COMBINED ANNUAL REPORT MAY PAY THE FULL AMOUNT OF
SUCH TAX, OR ANY PART THEREOF, TOGETHER WITH INTEREST DUE TO THE
DATE OF PAYMENT, WITHOUT PREJUDICE TO ITS RIGHT TO PRESENT AND
PROSECUTE, AN ADMINISTRATIVE PETITION OR AN APPEAL TO COURT. IF
IT BE THEREAFTER DETERMINED THAT SUCH TAXES WERE OVERPAID, THE
DEPARTMENT SHALL ENTER A CREDIT TO THE ACCOUNT OF SUCH
CORPORATION OR DESIGNATED MEMBER, WHICH MAY BE USED BY IT IN THE
MANNER PRESCRIBED BY LAW.
(D) IF THE OFFICERS OF ANY CORPORATION OR DESIGNATED MEMBER
SHALL NEGLECT, OR REFUSE TO MAKE ANY REPORT AS HEREIN REQUIRED,
OR SHALL KNOWINGLY MAKE ANY FALSE REPORT, A PENALTY OF FIVE
HUNDRED DOLLARS ($500) PLUS AN ADDITIONAL ONE PER CENT FOR EVERY
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DOLLAR OF TAX DETERMINED TO BE DUE IN EXCESS OF TWENTY-FIVE
THOUSAND DOLLARS ($25,000) SHALL BE ADDED TO THE TAX DETERMINED
TO BE DUE. NO AMOUNTS ADDED TO THE TAX SHALL BEAR ANY INTEREST
WHATSOEVER.
* * *
(E.1) IF THE MEMBERS OF A UNITARY BUSINESS HAVE A COMMON
TAXABLE YEAR THAT CLOSES NOT UPON DECEMBER 31, BUT UPON SOME
OTHER DATE, SUCH UNITARY BUSINESS SHALL MAKE THE COMBINED ANNUAL
REPORT, HEREIN REQUIRED, ON OR BEFORE THE FIFTEENTH DAY OF THE
MONTH FOLLOWING WHAT IS OR WOULD BE THE DUE DATE OF THE RETURN
TO THE FEDERAL GOVERNMENT, SUBJECT IN ALL OTHER RESPECTS TO THE
PROVISIONS OF THIS ARTICLE.
(F) IF THE CORPORATION OR ANY MEMBERS OF THE UNITARY
BUSINESS SHALL CLAIM IN ITS REPORT OR IN ITS COMBINED ANNUAL
REPORT THAT THE RETURN MADE TO THE FEDERAL GOVERNMENT WAS
INACCURATE, THE AMOUNT CLAIMED [BY IT] TO BE THE TAXABLE INCOME,
TAXABLE UNDER THIS ARTICLE, AND THE BASIS OF SUCH CLAIM OF
INACCURACY, SHALL BE FULLY SPECIFIED.
SECTION 5. SECTIONS 403.1 AND 403.2(B) AND (E) OF THE ACT
ARE AMENDED TO READ:
SECTION 403.1. TIMELY MAILING TREATED AS TIMELY FILING AND
PAYMENT.--NOTWITHSTANDING THE PROVISIONS OF ANY STATE TAX LAW TO
THE CONTRARY, WHENEVER A REPORT OR PAYMENT OF ALL OR ANY PORTION
OF A STATE TAX IS REQUIRED BY LAW TO BE RECEIVED BY THE
PENNSYLVANIA DEPARTMENT OF REVENUE OR OTHER AGENCY OF THE
COMMONWEALTH ON OR BEFORE A DAY CERTAIN, THE CORPORATION SHALL
BE DEEMED TO HAVE COMPLIED WITH SUCH LAW IF THE LETTER
TRANSMITTING THE REPORT OR PAYMENT OF SUCH TAX WHICH HAS BEEN
RECEIVED BY THE DEPARTMENT IS POSTMARKED BY THE UNITED STATES
POSTAL SERVICE ON OR PRIOR TO THE FINAL DAY ON WHICH THE PAYMENT
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IS TO BE RECEIVED.
FOR THE PURPOSES OF THIS ARTICLE, PRESENTATION OF A RECEIPT
INDICATING THAT THE REPORT OR PAYMENT WAS MAILED BY REGISTERED
OR CERTIFIED MAIL ON OR BEFORE THE DUE DATE SHALL BE EVIDENCE OF
TIMELY FILING AND PAYMENT.
FOR PURPOSES OF THIS SECTION, THE TERM "CORPORATION" SHALL
INCLUDE A UNITARY BUSINESS.
SECTION 403.2. ADDITIONAL WITHHOLDING REQUIREMENTS.--* * *
(B) A PARTNERSHIP REQUIRED TO FILE A REPORT UNDER SUBSECTION
(A) SHALL WITHHOLD AND PAY TO THE DEPARTMENT A TAX ON BEHALF OF
ITS NONFILING CORPORATE PARTNERS IN AN AMOUNT EQUAL TO ITS NET
NONFILING CORPORATE PARTNERS' SHARES OF INCOME AND DEDUCTIONS AS
REPORTED TO THE FEDERAL GOVERNMENT MULTIPLIED BY THE TAX RATE
APPLICABLE TO THE TAXABLE YEAR BEING REPORTED. ANY AMOUNT
WITHHELD AND PAID TO THE DEPARTMENT ON BEHALF OF A NONFILING
CORPORATE PARTNER SHALL BE CONSIDERED A TAX PAYMENT BY THAT
PARTNER AND CREDITED TO ITS ACCOUNT [AS IF IT WAS DIRECTLY PAID
BY THE PARTNER] OR THE ACCOUNT OF THE DESIGNATED MEMBER OF THE
UNITARY BUSINESS.
* * *
(E) THE FOLLOWING WORDS, TERMS AND PHRASES WHEN USED IN THIS
SECTION SHALL HAVE THE MEANING ASCRIBED TO THEM IN THIS SECTION,
EXCEPT WHERE THE CONTEXT CLEARLY INDICATES A DIFFERENT MEANING:
"NET NONFILING CORPORATE PARTNERS' SHARES OF INCOME AND
DEDUCTIONS AS REPORTED TO THE FEDERAL GOVERNMENT." THAT PORTION
OF THE INCOME, LESS THE DEDUCTIONS:
(1) REPORTED ON SCHEDULE K OF THE FEDERAL FORM 1065, RETURN
OF PARTNERSHIP INCOME, FILED WITH THE FEDERAL GOVERNMENT FOR THE
TAXABLE YEAR; AND
(2) ALLOCATED ON FEDERAL SCHEDULE K-1 TO NONFILING CORPORATE
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PARTNERS.
IF THE ENTIRE BUSINESS OF THE PARTNERSHIP IS NOT TRANSACTED IN
THIS COMMONWEALTH, THE AMOUNT COMPUTED UNDER THIS DEFINITION
SHALL BE APPORTIONED TO THIS COMMONWEALTH AS PROVIDED IN SECTION
401(3)2 AS IF THE PARTNERSHIP WERE A CORPORATION SUBJECT TO TAX
UNDER THIS ARTICLE.
"NONFILING CORPORATE PARTNER." A PARTNER WHICH:
(1) IS A CORPORATION AS DEFINED IN SECTION 401; AND
(2) HAS [NOT] NEITHER FILED A TAX REPORT NOR BEEN INCLUDED
IN A COMBINED ANNUAL REPORT AND HAS NOT PAID THE TAX REQUIRED BY
SECTIONS 402 AND 403 FOR THE PREVIOUS TAXABLE YEAR.
"PARTNER." AN OWNER OF AN INTEREST IN THE PARTNERSHIP, IN
WHATEVER MANNER THAT OWNER AND OWNERSHIP INTEREST ARE
DESIGNATED.
"PARTNERSHIP." AN ENTITY CLASSIFIED AS A PARTNERSHIP FOR
FEDERAL INCOME TAX PURPOSES.
(1) THE TERM INCLUDES:
(I) A PARTNERSHIP, LIMITED PARTNERSHIP, LIMITED LIABILITY
PARTNERSHIP OR LIMITED LIABILITY COMPANY; AND
(II) ANY SYNDICATE, GROUP, POOL, JOINT VENTURE, BUSINESS
TRUST, ASSOCIATION OR OTHER UNINCORPORATED ORGANIZATION THROUGH
OR BY WHICH A BUSINESS, FINANCIAL OPERATION OR VENTURE IS
CARRIED ON.
(2) THE TERM DOES NOT INCLUDE AN ENTITY THAT IS:
(I) LISTED ON A UNITED STATES NATIONAL STOCK EXCHANGE; OR
(II) DESCRIBED IN SECTION 401(1)1 OR 2.
SECTION 6. SECTION 404 OF THE ACT IS REPEALED:
[SECTION 404. CONSOLIDATED REPORTS.--THE DEPARTMENT SHALL
NOT PERMIT ANY CORPORATION OWNING OR CONTROLLING, DIRECTLY OR
INDIRECTLY, ANY OF THE VOTING CAPITAL STOCK OF ANOTHER
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CORPORATION OR OF OTHER CORPORATIONS, SUBJECT TO THE PROVISIONS
OF THIS ARTICLE, TO MAKE A CONSOLIDATED REPORT, SHOWING THE
COMBINED NET INCOME.]
SECTION 7. SECTION 405 OF THE ACT IS AMENDED TO READ:
SECTION 405. EXTENSION OF TIME TO FILE REPORTS.--THE
DEPARTMENT MAY, UPON APPLICATION MADE TO IT, IN SUCH FORM AS IT
SHALL PRESCRIBE, ON OR PRIOR TO THE LAST DAY FOR FILING ANY
ANNUAL REPORT, AND UPON PROPER CAUSE SHOWN, GRANT TO THE
CORPORATION, REQUIRED TO FILE SUCH REPORT, AN EXTENSION OF NOT
MORE THAN SIXTY DAYS WITHIN WHICH SUCH REPORT MAY BE FILED. IF
THE FEDERAL INCOME TAX AUTHORITIES GRANT AN EXTENSION OF TIME
FOR FILING THE REPORTS WITH THE FEDERAL GOVERNMENT, THE
DEPARTMENT SHALL AUTOMATICALLY GRANT AN EXTENSION OF TIME FOR
FILING THE ANNUAL REPORT UNDER THIS ARTICLE UNTIL THE FIFTEENTH
DAY OF THE MONTH FOLLOWING THE TERMINATION OF THE FEDERAL
EXTENSION, BUT THE AMOUNT OF TAX DUE SHALL, IN SUCH CASES,
NEVERTHELESS, BE SUBJECT TO INTEREST FROM THE DUE DATES AND AT
THE RATES FIXED BY THIS ARTICLE. FOR PURPOSES OF THIS SECTION
THE TERM "REPORT," WHEN USED IN THE CONTEXT OF FILINGS WITH THE
DEPARTMENT, SHALL INCLUDE COMBINED ANNUAL REPORTS AND THE TERM
"CORPORATION" SHALL INCLUDE A UNITARY BUSINESS.
SECTION 8. SECTION 406(E) OF THE ACT IS AMENDED AND THE
SECTION IS AMENDED BY ADDING A SUBSECTION TO READ:
SECTION 406. CHANGES MADE BY FEDERAL GOVERNMENT.--* * *
(E) THE PROVISIONS OF THIS SECTION SHALL APPLY TO EVERY
CORPORATION WHICH WAS DOING BUSINESS IN PENNSYLVANIA IN THE YEAR
FOR WHICH THE FEDERAL INCOME HAS BEEN CHANGED, IRRESPECTIVE OF
WHETHER OR NOT SUCH CORPORATION OR ANY MEMBER OF A UNITARY
BUSINESS HAS THEREAFTER MERGED, CONSOLIDATED, WITHDRAWN OR
DISSOLVED. ANY CLEARANCE CERTIFICATE ISSUED BY THE DEPARTMENT
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SHALL BE CONDITIONED UPON THE REQUIREMENT THAT IN THE EVENT OF A
CHANGE IN FEDERAL INCOME FOR ANY YEAR FOR WHICH TAXES HAVE BEEN
PAID TO THE COMMONWEALTH, THE CORPORATION OR ITS SUCCESSOR OR
ITS OFFICERS OR ITS DIRECTORS SHALL FILE WITH THE DEPARTMENT A
REPORT OF CHANGE AND PAY ANY ADDITIONAL STATE TAX RESULTING
THEREFROM.
(F) FOR PURPOSES OF THIS SECTION, THE TERM "CORPORATION"
SHALL INCLUDE A UNITARY BUSINESS.
SECTION 9. SECTIONS 407.3(F), 407.6(A)(5), (6) AND (8) AND
407.7(D)(3) OF THE ACT ARE AMENDED TO READ:
SECTION 407.3. LIMITATIONS ON ASSESSMENTS.--* * *
(F) FOR PURPOSES OF THIS SECTION[,]:
(1) A REPORT FILED BEFORE THE LAST DAY PRESCRIBED FOR FILING
SHALL BE DEEMED TO HAVE BEEN FILED ON THE LAST DAY[.]; AND
(2) THE TERM "REPORT" SHALL INCLUDE COMBINED ANNUAL REPORTS.
SECTION 407.6. DEFINITIONS.--(A) FOR THE PURPOSES OF THIS
PART ONLY, THE FOLLOWING WORDS, TERMS AND PHRASES SHALL HAVE THE
MEANING ASCRIBED TO THEM IN THIS SUBSECTION, EXCEPT WHERE THE
CONTEXT CLEARLY INDICATES A DIFFERENT MEANING:
* * *
(5) "QUALIFIED MANUFACTURING INNOVATION AND REINVESTMENT
DEDUCTION." AN ALLOWABLE DEDUCTION AS DETERMINED, CALCULATED
AND EXECUTED IN A COMMITMENT LETTER BETWEEN THE DEPARTMENT AND
THE TAXPAYER. THE DEDUCTION SHALL BE APPLIED TO THE TAXABLE
INCOME OF THE TAXPAYER TO REDUCE A QUALIFIED TAX LIABILITY OF
THE TAXPAYER FOLLOWING THE ALLOCATION AND APPORTIONMENT OF THE
INCOME OF THE TAXPAYER. IF THE TAXPAYER IS A UNITARY BUSINESS
FILING A COMBINED ANNUAL RETURN, THE DEDUCTION SHALL BE APPLIED
TO THE SPECIFIC MEMBER OF THE UNITARY BUSINESS WHICH QUALIFIES
UNDER THIS PART. SUCH MEMBER SHALL REDUCE TAXABLE INCOME
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FOLLOWING ALLOCATION AND THE APPORTIONMENT OF THE COMBINED
UNITARY INCOME OF THE UNITARY BUSINESS, AS DETERMINED ON A
WATER'S-EDGE BASIS, AND THE APPLICATION OF ANY NET LOSS OF THE
MEMBER.
(6) "QUALIFIED TAX LIABILITY." A TAXPAYER'S TAX LIABILITY
UNDER THIS ARTICLE. IN THE CASE OF A UNITARY BUSINESS, THE TERM
ONLY INCLUDES THE PORTION OF THE UNITARY BUSINESS'S OVERALL TAX
LIABILITY UNDER THIS ARTICLE ASSOCIATED WITH THE TAXABLE MEMBER
QUALIFIED TO RECEIVE THE DEDUCTION UNDER THIS PART.
* * *
(8) "TAXPAYER." AN EMPLOYER SUBJECT TO THE TAX UNDER THIS
ARTICLE. FOR PURPOSES OF THIS DEFINITION, AN EMPLOYER SHALL
INCLUDE A MEMBER OF A UNITARY BUSINESS.
* * *
SECTION 407.7. MANUFACTURING INNOVATION AND REINVESTMENT
DEDUCTION.--* * *
(D) * * *
(3) (I) A TAXPAYER CANNOT USE THE DEDUCTION TO REDUCE THE
TAXPAYER'S TAX LIABILITY BY MORE THAN FIFTY PER CENT OF THE TAX
LIABILITY UNDER THIS ARTICLE FOR THE TAXABLE YEAR. FOR A UNITARY
BUSINESS, THE LIMITATION SHALL APPLY TO THE PORTION OF THE TAX
LIABILITY OF THE UNITARY BUSINESS UNDER THIS ARTICLE ASSOCIATED
WITH THE TAXABLE MEMBER WHICH QUALIFIES FOR THE DEDUCTION UNDER
THIS SECTION.
(II) THE DEDUCTION IS NONTRANSFERABLE AND ANY UNUSED PORTION
IN A TAX YEAR SHALL EXPIRE AT THE END OF THE CORRESPONDING TAX
YEAR.
SECTION 10. SECTION 408 OF THE ACT IS AMENDED BY ADDING A
SUBSECTION TO READ:
SECTION 408. ENFORCEMENT; RULES AND REGULATIONS;
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INQUISITORIAL POWERS OF THE DEPARTMENT.--* * *
(E) AS USED IN THIS SECTION, THE TERM "CORPORATION" SHALL
INCLUDE A UNITARY BUSINESS.
SECTION 11. SECTIONS 409 AND 410(C) OF THE ACT ARE AMENDED
TO READ:
SECTION 409. RETENTION OF RECORDS.--EACH CORPORATION SHALL
MAINTAIN AND KEEP FOR A PERIOD OF THREE YEARS AFTER ANY REPORT
IS FILED UNDER THIS ARTICLE, SUCH RECORD OR RECORDS OF ITS
BUSINESS WITHIN THIS COMMONWEALTH FOR THE PERIOD COVERED BY SUCH
REPORT AND OTHER PERTINENT PAPERS, AS MAY BE REQUIRED BY THE
DEPARTMENT. FOR PURPOSES OF THIS SECTION, THE TERM "CORPORATION"
SHALL INCLUDE A UNITARY BUSINESS.
SECTION 410. PENALTIES.--* * *
(C) ANY PERSON, WHO WILFULLY FAILS, NEGLECTS, OR REFUSES TO
MAKE A REPORT OR TO PAY THE TAX AS HEREIN PRESCRIBED, OR WHO
SHALL REFUSE TO PERMIT THE DEPARTMENT TO EXAMINE THE BOOKS,
PAPERS, AND RECORDS OF ANY CORPORATION LIABLE TO PAY TAX UNDER
THIS ARTICLE, SHALL BE GUILTY OF A MISDEMEANOR, AND, UPON
CONVICTION THEREOF, SHALL BE SENTENCED TO PAY A FINE NOT
EXCEEDING ONE THOUSAND DOLLARS ($1,000) AND COSTS OF
PROSECUTION, OR TO UNDERGO IMPRISONMENT NOT EXCEEDING SIX
MONTHS, OR BOTH. SUCH PENALTY SHALL BE IN ADDITION TO ANY OTHER
PENALTIES IMPOSED BY THIS ARTICLE. FOR PURPOSES OF THIS
SUBSECTION, THE TERM "CORPORATION" SHALL INCLUDE A UNITARY
BUSINESS.
SECTION 12. SECTION 1101(A), (B) AND (H) OF THE ACT ARE
AMENDED AND THE SECTION IS AMENDED BY ADDING SUBSECTIONS TO
READ:
SECTION 1101. IMPOSITION OF TAX.--(A) GENERAL RULE.--EVERY
PIPELINE COMPANY, CONDUIT COMPANY, STEAMBOAT COMPANY, CANAL
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COMPANY, SLACK WATER NAVIGATION COMPANY, TRANSPORTATION COMPANY,
AND EVERY OTHER COMPANY, ASSOCIATION, JOINT-STOCK ASSOCIATION,
OR LIMITED PARTNERSHIP, NOW OR HEREAFTER INCORPORATED OR
ORGANIZED BY OR UNDER ANY LAW OF THIS COMMONWEALTH, OR NOW OR
HEREAFTER ORGANIZED OR INCORPORATED BY ANY OTHER STATE OR BY THE
UNITED STATES OR ANY FOREIGN GOVERNMENT, AND DOING BUSINESS IN
THIS COMMONWEALTH, AND EVERY COPARTNERSHIP, PERSON OR PERSONS
OWING, OPERATING OR LEASING TO OR FROM ANOTHER CORPORATION,
COMPANY, ASSOCIATION, JOINT-STOCK ASSOCIATION, LIMITED
PARTNERSHIP, COPARTNERSHIP, PERSON OR PERSONS, ANY PIPELINE,
CONDUIT, STEAMBOAT, CANAL, SLACK WATER NAVIGATION, OR OTHER
DEVICE FOR THE TRANSPORTATION OF FREIGHT, PASSENGERS, BAGGAGE,
OR OIL, EXCEPT MOTOR VEHICLES AND RAILROADS, AND EVERY LIMITED
PARTNERSHIP, ASSOCIATION, JOINT-STOCK ASSOCIATION, CORPORATION
OR COMPANY ENGAGED IN, OR HEREINAFTER ENGAGED IN, THE
TRANSPORTATION OF FREIGHT OR OIL WITHIN THIS STATE, AND EVERY
TELEPHONE COMPANY, TELEGRAPH COMPANY OR PROVIDER OF MOBILE
TELECOMMUNICATIONS SERVICES NOW OR HEREAFTER INCORPORATED OR
ORGANIZED BY OR UNDER ANY LAW OF THIS COMMONWEALTH, OR NOW OR
HEREAFTER ORGANIZED OR INCORPORATED BY ANY OTHER STATE OR BY THE
UNITED STATES OR ANY FOREIGN GOVERNMENT AND DOING BUSINESS IN
THIS COMMONWEALTH, AND EVERY LIMITED PARTNERSHIP, ASSOCIATION,
JOINT-STOCK ASSOCIATION, COPARTNERSHIP, PERSON OR PERSONS,
ENGAGED IN TELEPHONE OR TELEGRAPH BUSINESS OR PROVIDING MOBILE
TELECOMMUNICATIONS SERVICES IN THIS COMMONWEALTH, AND EVERY
LIMITED PARTNERSHIP, ASSOCIATION, JOINT-STOCK ASSOCIATION,
CORPORATION OR COMPANY PROVIDING DIGITAL ADVERTISING SERVICES IN
THIS COMMONWEALTH, SHALL PAY TO THE STATE TREASURER, THROUGH THE
DEPARTMENT OF REVENUE, A TAX OF FORTY-FIVE MILLS WITH A SURTAX
EQUAL TO FIVE MILLS UPON EACH DOLLAR OF THE GROSS RECEIPTS OF
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THE CORPORATION, COMPANY OR ASSOCIATION, LIMITED PARTNERSHIP,
JOINT-STOCK ASSOCIATION, COPARTNERSHIP, PERSON OR PERSONS
RECEIVED FROM:
(1) PASSENGERS, BAGGAGE, OIL AND FREIGHT TRANSPORTED WHOLLY
WITHIN THIS STATE;
(2) TELEGRAPH OR TELEPHONE MESSAGES TRANSMITTED WHOLLY
WITHIN THIS STATE AND TELEGRAPH OR TELEPHONE MESSAGES
TRANSMITTED IN INTERSTATE COMMERCE WHERE SUCH MESSAGES ORIGINATE
OR TERMINATE IN THIS STATE AND THE CHARGES FOR SUCH MESSAGES ARE
BILLED TO A SERVICE ADDRESS IN THIS STATE, EXCEPT GROSS RECEIPTS
DERIVED FROM:
(I) THE SALES OF ACCESS TO THE INTERNET, AS SET FORTH IN
ARTICLE II, MADE TO THE ULTIMATE CONSUMER;
(II) THE SALES FOR RESALE TO PERSONS, PARTNERSHIPS,
ASSOCIATIONS, CORPORATIONS, OR POLITICAL SUBDIVISIONS SUBJECT TO
THE TAX IMPOSED BY THIS ARTICLE UPON GROSS RECEIPTS DERIVED FROM
SUCH RESALE OF TELECOMMUNICATIONS SERVICES, INCLUDING:
(A) TELECOMMUNICATIONS EXCHANGE ACCESS TO INTERCONNECT WITH
A LOCAL EXCHANGE CARRIER'S NETWORK;
(B) NETWORK ELEMENTS ON AN UNBUNDLED BASIS; AND
(C) SALES OF TELECOMMUNICATIONS SERVICES TO INTERCONNECT
WITH PROVIDERS OF MOBILE TELECOMMUNICATIONS SERVICES; AND
(III) THE SALES OF TELEPHONES, TELEPHONE HANDSETS, MODEMS,
TABLETS AND RELATED ACCESSORIES, INCLUDING CASES, CHARGERS,
HOLSTERS, CLIPS, HANDS-FREE DEVICES, SCREEN PROTECTORS AND
BATTERIES; [AND]
(3) MOBILE TELECOMMUNICATIONS SERVICES MESSAGES SOURCED TO
THIS COMMONWEALTH BASED ON THE PLACE OF PRIMARY USE STANDARD SET
FORTH IN THE MOBILE TELECOMMUNICATIONS SOURCING ACT (4 U.S.C. §
117), EXCEPT GROSS RECEIPTS DERIVED FROM:
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(I) THE SALES OF ACCESS TO THE INTERNET, AS SET FORTH IN
ARTICLE II, MADE TO THE ULTIMATE CONSUMER;
(II) THE SALES FOR RESALE TO PERSONS, PARTNERSHIPS,
ASSOCIATIONS, CORPORATIONS OR POLITICAL SUBDIVISIONS SUBJECT TO
THE TAX IMPOSED BY THIS ARTICLE UPON GROSS RECEIPTS DERIVED FROM
SUCH RESALE OF MOBILE TELECOMMUNICATIONS SERVICES, INCLUDING
SALES OF MOBILE TELECOMMUNICATIONS SERVICES TO INTERCONNECT WITH
PROVIDERS OF TELECOMMUNICATIONS SERVICES; AND
(III) THE SALES OF TELEPHONES, TELEPHONE HANDSETS, MODEMS,
TABLETS AND RELATED ACCESSORIES, INCLUDING CASES, CHARGERS,
HOLSTERS, CLIPS, HANDS-FREE DEVICES, SCREEN PROTECTORS AND
BATTERIES[.]; AND
(4) DIGITAL ADVERTISING SERVICES DISPLAYED TO A USER ON A
DIGITAL INTERFACE WHOLLY WITHIN THIS COMMONWEALTH, INCLUDING
BANNER ADVERTISING, SEARCH ENGINE ADVERTISING, INTERSTITIAL
ADVERTISING AND COMPARABLE ADVERTISING SERVICES THAT UTILIZE THE
PERSONAL INFORMATION OF THE USERS TO WHOM THE ADVERTISEMENTS ARE
SERVED. AS USED IN THIS CLAUSE, THE FOLLOWING WORDS AND PHRASES
SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS CLAUSE:
"DIGITAL ADVERTISING SERVICES." THE PROVISION OF
ADVERTISEMENTS DISPLAYED ON A DIGITAL INTERFACE.
"DIGITAL INTERFACE." ANY SOFTWARE, INCLUDING AN INTERNET
WEBSITE, PART OF AN INTERNET WEBSITE OR APPLICATION, ACCESSIBLE
TO A USER.
"USER." AN INDIVIDUAL OR OTHER PERSON ACCESSING A DIGITAL
INTERFACE VIA A DEVICE.
* * *
(A.2) TRANSFER TO ALTERNATIVE FUELS INCENTIVE FUND.--
NOTWITHSTANDING ANY OTHER PROVISION OF LAW, BEGINNING IN FISCAL
YEAR 2026-2027, AND EACH FISCAL YEAR THEREAFTER, SEVEN MILLION
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DOLLARS ($7,000,000) OF THE TAXES RECEIVED UNDER SUBSECTION (A)
SHALL BE TRANSFERRED TO THE ALTERNATIVE FUELS INCENTIVE FUND
ESTABLISHED UNDER SECTION 3 OF THE ACT OF NOVEMBER 29, 2004
(P.L.1376, NO.178), KNOWN AS THE ALTERNATIVE FUELS INCENTIVE
ACT. THE TRANSFER REQUIRED UNDER THIS SUBSECTION SHALL BE MADE
ANNUALLY BY MAY 31, 2027, AND EACH MAY 31 THEREAFTER.
(B) ELECTRIC LIGHT, WATERPOWER AND HYDRO-ELECTRIC
UTILITIES.--
(1) EVERY ELECTRIC LIGHT COMPANY, WATERPOWER COMPANY AND
HYDRO-ELECTRIC COMPANY NOW OR HEREAFTER INCORPORATED OR
ORGANIZED BY OR UNDER ANY LAW OF THIS COMMONWEALTH, OR NOW OR
HEREAFTER ORGANIZED OR INCORPORATED BY ANY OTHER STATE OR BY THE
UNITED STATES OR ANY FOREIGN GOVERNMENT AND DOING BUSINESS IN
THIS COMMONWEALTH, AND EVERY LIMITED PARTNERSHIP, ASSOCIATION,
JOINT-STOCK ASSOCIATION, COPARTNERSHIP, PERSON OR PERSONS,
ENGAGED IN ELECTRIC LIGHT AND POWER BUSINESS, WATERPOWER
BUSINESS AND HYDRO-ELECTRIC BUSINESS IN THIS COMMONWEALTH, SHALL
PAY TO THE STATE TREASURER, THROUGH THE DEPARTMENT OF REVENUE, A
TAX OF FORTY-FOUR MILLS UPON EACH DOLLAR OF THE GROSS RECEIPTS
OF THE CORPORATION, COMPANY OR ASSOCIATION, LIMITED PARTNERSHIP,
JOINT-STOCK ASSOCIATION, COPARTNERSHIP, PERSON OR PERSONS,
RECEIVED FROM:
[(1)] (I) THE SALES OF ELECTRIC ENERGY WITHIN THIS STATE,
EXCEPT GROSS RECEIPTS DERIVED FROM THE SALES FOR RESALE OF
ELECTRIC ENERGY TO PERSONS, PARTNERSHIPS, ASSOCIATIONS,
CORPORATIONS OR POLITICAL SUBDIVISIONS SUBJECT TO THE TAX
IMPOSED BY THIS SUBSECTION UPON GROSS RECEIPTS DERIVED FROM SUCH
RESALE; AND
[(2)] (II) THE SALES OF ELECTRIC ENERGY PRODUCED IN
PENNSYLVANIA AND MADE OUTSIDE OF PENNSYLVANIA IN A STATE THAT
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HAS TAKEN ACTION SINCE DECEMBER 21, 1977 WHICH RESULTS IN HIGHER
COSTS FOR ELECTRIC ENERGY PRODUCED IN THAT STATE AND SOLD IN
PENNSYLVANIA UNLESS THE ACTION THAT WAS TAKEN AFTER DECEMBER 21,
1977 IS RESCINDED ACCORDING TO THE FOLLOWING APPORTIONMENT
FORMULA: EXCEPT FOR GROSS RECEIPTS DERIVED FROM SALES UNDER
[CLAUSE (1)] SUBCLAUSE (I), THE GROSS RECEIPTS FROM ALL SALES OF
ELECTRICITY OF THE PRODUCER SHALL BE APPORTIONED TO THE
COMMONWEALTH OF PENNSYLVANIA BY THE RATIO OF THE PRODUCER'S
OPERATING AND MAINTENANCE EXPENSES IN PENNSYLVANIA AND
DEPRECIATION ATTRIBUTABLE TO PROPERTY IN PENNSYLVANIA TO THE
PRODUCER'S TOTAL OPERATING AND MAINTENANCE EXPENSES AND
DEPRECIATION.
(2) THIS SUBSECTION SHALL EXPIRE JULY 1, 2026.
(B.1) IMPOSITION.--BEGINNING ON JULY 1, 2026, EVERY ELECTRIC
LIGHT COMPANY, WATERPOWER COMPANY AND HYDRO-ELECTRIC COMPANY NOW
OR HEREAFTER INCORPORATED OR ORGANIZED BY OR UNDER ANY LAW OF
THIS COMMONWEALTH, OR NOW OR HEREAFTER ORGANIZED OR INCORPORATED
BY ANY OTHER STATE OR BY THE UNITED STATES OR ANY FOREIGN
GOVERNMENT AND DOING BUSINESS IN THIS COMMONWEALTH, AND EVERY
LIMITED PARTNERSHIP, ASSOCIATION, JOINT-STOCK ASSOCIATION,
COPARTNERSHIP, PERSON OR PERSONS, ENGAGED IN ELECTRIC LIGHT AND
POWER BUSINESS, WATERPOWER BUSINESS AND HYDRO-ELECTRIC BUSINESS
IN THIS COMMONWEALTH, SHALL PAY TO THE STATE TREASURER, THROUGH
THE DEPARTMENT OF REVENUE, A TAX OF FORTY-FOUR MILLS UPON EACH
DOLLAR OF THE GROSS RECEIPTS OF THE CORPORATION, COMPANY OR
ASSOCIATION, LIMITED PARTNERSHIP, JOINT-STOCK ASSOCIATION,
COPARTNERSHIP, PERSON OR PERSONS, RECEIVED FROM:
(1) THE SALES OF ELECTRIC ENERGY TO A COMMERCIAL ACCOUNT OR
INDUSTRIAL ACCOUNT WITHIN THIS COMMONWEALTH, EXCEPT GROSS
RECEIPTS DERIVED FROM THE SALES FOR RESALE OF ELECTRIC ENERGY TO
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PERSONS, PARTNERSHIPS, ASSOCIATIONS, CORPORATIONS OR POLITICAL
SUBDIVISIONS SUBJECT TO THE TAX IMPOSED BY THIS SUBSECTION UPON
GROSS RECEIPTS DERIVED FROM SUCH RESALE, PROVIDED THAT THE SALES
OF ELECTRIC ENERGY TO A RESIDENTIAL ACCOUNT WITHIN THIS
COMMONWEALTH SHALL BE EXEMPT FROM TAX UNDER THIS ARTICLE; AND
(2) THE SALES OF ELECTRIC ENERGY PRODUCED IN PENNSYLVANIA
AND MADE OUTSIDE OF PENNSYLVANIA IN A STATE THAT HAS TAKEN
ACTION SINCE DECEMBER 21, 1977, WHICH RESULTS IN HIGHER COSTS
FOR ELECTRIC ENERGY PRODUCED IN THAT STATE AND SOLD IN
PENNSYLVANIA UNLESS THE ACTION THAT WAS TAKEN AFTER DECEMBER 21,
1977 IS RESCINDED ACCORDING TO THE FOLLOWING APPORTIONMENT
FORMULA: EXCEPT FOR GROSS RECEIPTS DERIVED FROM SALES UNDER
CLAUSE (1), THE GROSS RECEIPTS FROM ALL SALES OF ELECTRICITY OF
THE PRODUCER SHALL BE APPORTIONED TO THE COMMONWEALTH OF
PENNSYLVANIA BY THE RATIO OF THE PRODUCER'S OPERATING AND
MAINTENANCE EXPENSES IN PENNSYLVANIA AND DEPRECIATION
ATTRIBUTABLE TO PROPERTY IN PENNSYLVANIA TO THE PRODUCER'S TOTAL
OPERATING AND MAINTENANCE EXPENSES AND DEPRECIATION.
* * *
(G.1) EXEMPTION FOR BROADCAST AND NEWS MEDIA ENTITIES.--THE
TAX IMPOSED UNDER THIS SECTION ON GROSS RECEIPTS DERIVED FROM
DIGITAL ADVERTISING SERVICES SHALL NOT HOWEVER BE IMPOSED ON
GROSS RECEIPTS FROM ADVERTISING SERVICES DISPLAYED ON A DIGITAL
INTERFACE OWNED OR OPERATED BY A BROADCAST ENTITY OR NEWS MEDIA
ENTITY. AS USED IN THIS SUBSECTION, THE FOLLOWING WORDS AND
PHRASES SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS
SUBSECTION:
"BROADCAST ENTITY." AN ENTITY PRIMARILY ENGAGED IN OPERATING
A BROADCAST TELEVISION OR RADIO STATION.
"DIGITAL ADVERTISING SERVICES." AS DEFINED IN SUBSECTION (A)
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(4).
"DIGITAL INTERFACE." AS DEFINED IN SUBSECTION (A)(4).
"NEWS MEDIA ENTITY." AN ENTITY PRIMARILY ENGAGED IN
NEWSGATHERING, REPORTING OR PUBLISHING ARTICLES OR COMMENTARY ON
NEWS, CURRENT EVENTS, CULTURE OR OTHER MATTERS OF PUBLIC
INTEREST.
(H) BENEFITS TO CONSUMER.--
(1) FOR PURPOSES OF THIS ARTICLE, THE REDUCTION IN THE TAXES
IMPOSED UNDER SUBSECTIONS (A) AND (B) SHALL DERIVE TO THE
BENEFIT OF THE CONSUMER PURCHASING SERVICES FROM SAID UTILITIES.
SAID BENEFIT SHALL BE PROVIDED IN THE FORM OF A REDUCTION IN THE
STATE TAX SURCHARGE. FAILURE TO PASS THROUGH THE REDUCTION TO
THE CONSUMER SHALL SUBJECT THE PUBLIC UTILITY TO A CIVIL PENALTY
OF AT LEAST ONE THOUSAND DOLLARS ($1,000), BUT NOT MORE THAN
FIVE THOUSAND DOLLARS ($5,000), AND SUCH ADDITIONAL RELIEF AS
THE COURT MAY DEEM APPROPRIATE.
(2) FOR PURPOSES OF THIS ARTICLE, THE EXEMPTION OF
RESIDENTIAL ACCOUNTS FROM THE TAX IMPOSED UNDER SUBSECTION (B.1)
SHALL DERIVE TO THE BENEFIT OF THE RESIDENTIAL ACCOUNT
PURCHASING ELECTRIC ENERGY. THE BENEFIT SHALL BE PROVIDED IN THE
FORM OF THE ELIMINATION OF OR A REDUCTION IN THE STATE TAX
SURCHARGE. FAILURE TO PASS THROUGH THE ELIMINATION OR REDUCTION
TO THE CONSUMER SHALL SUBJECT THE ENTITY TO A CIVIL PENALTY OF
AT LEAST ONE THOUSAND DOLLARS ($1,000), BUT NOT MORE THAN FIVE
THOUSAND DOLLARS ($5,000), AND ADDITIONAL RELIEF AS THE COURT
MAY DEEM APPROPRIATE.
* * *
SECTION 13. THE ACT IS AMENDED BY ADDING SECTIONS TO READ:
SECTION 1104. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND
PHRASES WHEN USED IN THIS ARTICLE SHALL HAVE THE MEANING
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ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT
CLEARLY INDICATES A DIFFERENT MEANING:
"COMMERCIAL ACCOUNT." AN ELECTRIC DISTRIBUTION SERVICE
ACCOUNT SERVED UNDER A COMMERCIAL RATE SCHEDULE APPROVED BY THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION.
"INDUSTRIAL ACCOUNT." AN ELECTRIC DISTRIBUTION SERVICE
ACCOUNT SERVED UNDER AN INDUSTRIAL RATE SCHEDULE APPROVED BY THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION.
"RESIDENTIAL ACCOUNT." AN ELECTRIC DISTRIBUTION SERVICE
ACCOUNT SERVED UNDER A RESIDENTIAL RATE SCHEDULE APPROVED BY THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION.
SECTION 1710-A.1. APPLICATION OF TAX CREDITS OR TAX BENEFITS TO
A UNITARY BUSINESS.
FOR PURPOSES OF DETERMINING THE AMOUNT OF TAX CREDIT OR TAX
BENEFIT WHICH IS APPLICABLE TO THE TAX DUE BY A UNITARY BUSINESS
UNDER ARTICLE IV, ANY TAX CREDIT OR TAX BENEFIT AWARDED TO OR
CONFERRED UPON A CORPORATION WHICH IS A MEMBER OF A UNITARY
BUSINESS SHALL BE CALCULATED AS IF THAT MEMBER IS A SEPARATE
COMPANY AND CAN ONLY BE APPLIED AGAINST THAT PORTION OF THE
UNITARY BUSINESS'S ANNUAL TAX LIABILITY ASSOCIATED WITH THAT
MEMBER WHICH RECEIVES THE TAX CREDIT OR TAX BENEFIT. FOR
PURPOSES OF THIS ARTICLE, THE TERM "UNITARY BUSINESS" SHALL HAVE
THE SAME MEANING AS IN SECTION 401(13) AND THE TERM "MEMBER"
SHALL HAVE THE SAME MEANING AS IN SECTION 401(17).
SECTION 14. THE ACT IS AMENDED BY ADDING ARTICLES TO READ:
ARTICLE XVII-E.1
EDUCATION TAX CREDITS
SECTION 1701-E.1. LIMITATIONS.
(A) AMOUNT.--NOTWITHSTANDING SECTION 2006-B OF THE ACT OF
MARCH 10, 1949 (P.L.30, NO.14), KNOWN AS THE PUBLIC SCHOOL CODE
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OF 1949:
(1) FOR FISCAL YEARS PRIOR TO THE 2027-2028 FISCAL YEAR,
THE TOTAL AGGREGATE AMOUNT OF ALL TAX CREDITS APPROVED FOR
CONTRIBUTIONS FROM BUSINESS FIRMS TO SCHOLARSHIP
ORGANIZATIONS, EDUCATIONAL IMPROVEMENT ORGANIZATIONS AND PRE-
KINDERGARTEN SCHOLARSHIP ORGANIZATIONS SHALL NOT EXCEED
$590,000,000 IN A FISCAL YEAR.
(2) FOR FISCAL YEARS PRIOR TO THE 2027-2028 FISCAL YEAR,
THE TOTAL AGGREGATE AMOUNT OF ALL TAX CREDITS APPROVED FOR
CONTRIBUTIONS FROM BUSINESS FIRMS TO OPPORTUNITY SCHOLARSHIP
ORGANIZATIONS SHALL NOT EXCEED $90,000,000 IN A FISCAL YEAR.
(3) NO TAX CREDIT MAY BE APPROVED UNDER THIS ARTICLE FOR
THE 2027-2028 FISCAL YEAR OR A FISCAL YEAR THEREAFTER.
SECTION 1702-E.1. TERMINATION OF AUTHORITY.
(A) APPLICATIONS.--THE DEPARTMENT MAY NOT ACCEPT AN
APPLICATION FOR A TAX CREDIT UNDER ARTICLE XX-B OF THE ACT OF
MARCH 10, 1949 (P.L.30, NO.14), KNOWN AS THE PUBLIC SCHOOL CODE
OF 1949, FOR THE 2027-2028 FISCAL YEAR OR A FISCAL YEAR
THEREAFTER.
(B) APPROVAL.--THE DEPARTMENT MAY NOT APPROVE A TAX CREDIT
UNDER ARTICLE XX-B OF THE PUBLIC SCHOOL CODE OF 1949 FOR THE
2027-2028 FISCAL YEAR OR A FISCAL YEAR THEREAFTER.
(C) CONSTRUCTION.--NOTHING IN THIS SECTION SHALL BE
CONSTRUED TO AFFECT THE VALIDITY, USE, ADMINISTRATION,
REPORTING, REVIEW, ENFORCEMENT OR RECAPTURE OF A TAX CREDIT
APPROVED UNDER ARTICLE XX-B OF THE PUBLIC SCHOOL CODE FOR A
FISCAL YEAR PRIOR TO THE 2027-2028 FISCAL YEAR.
ARTICLE XVII-F
EDUCATION OPTIONS TAX CREDITS
SECTION 1701-F. SCOPE OF ARTICLE.
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THIS ARTICLE RELATES TO EDUCATION OPTIONS TAX CREDITS.
SECTION 1702-F. DEFINITIONS.
THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ARTICLE
SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
CONTEXT CLEARLY INDICATES OTHERWISE:
"ACCOUNT." THE ACCOUNTABILITY FOR DIVERTED TAX DOLLARS
RESTRICTED ACCOUNT ESTABLISHED UNDER SECTION 1703-F(F).
"APPLICABLE TAX." ANY OF THE TAXES DUE UNDER ARTICLE III,
IV, VI, VII, VIII, IX, XV OR XX OR A TAX UNDER ARTICLE XVI OF
THE ACT OF MAY 17, 1921 (P.L.682, NO.284), KNOWN AS THE
INSURANCE COMPANY LAW OF 1921.
"APPLICANT." AN ELIGIBLE EARLY CHILDHOOD STUDENT OR ELIGIBLE
STUDENT WHO APPLIES FOR A SCHOLARSHIP.
"ASSESSMENT." THE PENNSYLVANIA SYSTEM OF SCHOOL ASSESSMENT
TEST, THE KEYSTONE EXAM, AN EQUIVALENT LOCAL ASSESSMENT OR
ANOTHER TEST ESTABLISHED OR APPROVED BY THE STATE BOARD OF
EDUCATION OR THE GENERAL ASSEMBLY TO MEET THE REQUIREMENTS OF
SECTION 2603-B(D)(10)(I) OF THE ACT OF MARCH 10, 1949 (P.L.30,
NO.14), KNOWN AS THE PUBLIC SCHOOL CODE OF 1949, OR REQUIRED
UNDER THE EVERY STUDENT SUCCEEDS ACT (PUBLIC LAW 114-95, 129
STAT. 1802) OR ITS SUCCESSOR STATUTE OR ANOTHER TEST REQUIRED TO
ACHIEVE OTHER STANDARDS ESTABLISHED BY THE DEPARTMENT OF
EDUCATION FOR THE PUBLIC SCHOOL OR SCHOOL DISTRICT UNDER 22 PA.
CODE § 403.3 (RELATING TO SINGLE ACCOUNTABILITY SYSTEM).
"ATTENDANCE BOUNDARY." A GEOGRAPHIC AREA OF RESIDENCE USED
BY A SCHOOL DISTRICT TO ASSIGN A STUDENT TO A PUBLIC SCHOOL .
"AVERAGE DAILY MEMBERSHIP." AS DEFINED IN SECTION 2501(3) OF
THE PUBLIC SCHOOL CODE OF 1949 .
"BUSINESS FIRM." AN ENTITY AUTHORIZED TO DO BUSINESS IN THIS
COMMONWEALTH AND SUBJECT TO TAXES IMPOSED UNDER ARTICLE III, IV,
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VI, VII, VIII, IX, XV OR XX OR A TAX UNDER ARTICLE XVI OF THE
INSURANCE COMPANY LAW OF 1921. THE TERM DOES NOT INCLUDE A PASS-
THROUGH ENTITY THE PURPOSE OF WHICH IS MAKING CONTRIBUTIONS
UNDER THIS ARTICLE.
"CAREER AND TECHNICAL SCHOOL." A PUBLIC SECONDARY SCHOOL
ESTABLISHED UNDER ARTICLE XVIII OF THE PUBLIC SCHOOL CODE OF
1949.
"CONTRIBUTION." A DONATION OF CASH, PERSONAL PROPERTY OR
SERVICES, THE VALUE OF WHICH IS THE NET COST OF THE DONATION TO
THE DONOR OR THE PRO RATA HOURLY WAGE, INCLUDING BENEFITS, OF
THE INDIVIDUAL PERFORMING THE SERVICES.
"DEPARTMENT." THE DEPARTMENT OF COMMUNITY AND ECONOMIC
DEVELOPMENT OF THE COMMONWEALTH.
"EARLY CHILDHOOD PROGRAM." AN EARLY LEARNING AND DEVELOPMENT
PROGRAM FOR CHILDREN UNDER SIX YEARS OF AGE, INCLUDING ANY OF
THE FOLLOWING:
(1) A CHILD CARE CENTER AS DEFINED UNDER 55 PA. CODE §
3270.4 (RELATING TO DEFINITIONS).
(2) A GROUP CHILD CARE HOME AS DEFINED UNDER 55 PA. CODE
§ 3280.4 (RELATING TO DEFINITIONS).
(3) A FAMILY CHILD CARE HOME AS DEFINED UNDER 55 PA.
CODE § 3290.4 (RELATING TO DEFINITIONS).
(4) A PROGRAM OF INSTRUCTION FOR THREE-YEAR-OLD, FOUR-
YEAR-OLD, FIVE-YEAR-OLD OR SIX-YEAR-OLD STUDENTS, OTHER THAN
KINDERGARTEN, THAT USES A CURRICULUM ALIGNED WITH THE
CURRICULUM OF THE SCHOOL WITH WHICH IT IS AFFILIATED AND
PROVIDES ANY OF THE FOLLOWING:
(I) A MINIMUM OF TWO HOURS OF INSTRUCTIONAL AND
DEVELOPMENTAL ACTIVITIES PER DAY FOR AT LEAST 60 DAYS PER
SCHOOL YEAR.
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(II) A MINIMUM OF TWO HOURS OF INSTRUCTIONAL AND
DEVELOPMENTAL ACTIVITIES PER DAY FOR AT LEAST 20 DAYS
OVER THE SUMMER RECESS.
"EARLY CHILDHOOD SCHOLARSHIP PROGRAM." A PROGRAM THAT
PROVIDES SCHOLARSHIPS TO ELIGIBLE EARLY CHILDHOOD STUDENTS TO
ATTEND AN EARLY CHILDHOOD PROGRAM OPERATING WITHIN THIS
COMMONWEALTH. THE TERM INCLUDES A PROGRAM THAT HAS AN
APPLICATION AND REVIEW PROCESS FOR MAKING AWARDS TO ELIGIBLE
EARLY CHILDHOOD STUDENTS AND AWARDS SCHOLARSHIPS TO ELIGIBLE
EARLY CHILDHOOD STUDENTS WITHOUT LIMITING AVAILABILITY TO
STUDENTS OF ONE SCHOOL OR ONE BUILDING WITHIN A SCHOOL DISTRICT
OR NONPUBLIC SCHOOL.
"EARLY CHILDHOOD STUDENT." AN INDIVIDUAL WHO MEETS ALL OF
THE FOLLOWING:
(1) IS YOUNGER THAN COMPULSORY SCHOOL AGE AS DEFINED IN
SECTION 1326 OF THE PUBLIC SCHOOL CODE OF 1949.
(2) IS A RESIDENT OF THIS COMMONWEALTH.
(3) ATTENDS AN EARLY CHILDHOOD PROGRAM.
"ECONOMICALLY DISADVANTAGED SCHOLARSHIP PROGRAM." A PROGRAM
THAT PROVIDES SCHOLARSHIPS TO ELIGIBLE STUDENTS WHO MEET ANY OF
THE FOLLOWING:
(1) RESIDE WITHIN THE ATTENDANCE BOUNDARY OF A LOW-
ACHIEVING SCHOOL.
(2) ATTEND A SCHOOL THAT IS ON THE LIST PUBLISHED BY THE
DEPARTMENT OF EDUCATION UNDER SECTION 1703-F(B)(3) OF THE
PUBLIC SCHOOL CODE OF 1949.
"EDUCATIONAL IMPROVEMENT PROGRAM." AN ADVANCED ACADEMIC OR
SIMILAR PROGRAM THAT IS OPERATED BY OR IN CONJUNCTION WITH A
PUBLIC SCHOOL, INCLUDING A CHARTERED SCHOOL AS DEFINED IN
SECTION 1376.1 OF THE PUBLIC SCHOOL CODE OF 1949, A PRIVATE
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SCHOOL APPROVED UNDER SECTION 1376 OF THE PUBLIC SCHOOL CODE OF
1949 OR AN INTERMEDIATE UNIT, IS NOT PART OF THE REGULAR
ACADEMIC PROGRAM OF THE SCHOOL AND ENHANCES THE CURRICULUM OR
ACADEMIC PROGRAM OF THE SCHOOL. THE TERM INCLUDES A PROGRAM OR
ACTIVITY THAT OTHERWISE MEETS THIS DEFINITION AND HAS ANY OF THE
FOLLOWING CHARACTERISTICS:
(1) INTEGRATES WITH THE INSTRUCTIONAL PROGRAM OF THE
SCHOOL.
(2) SUPPLEMENTS, RECONSTRUCTS OR INVOLVES A MAJOR
REVISION TO THE CURRICULUM OR ACADEMIC PROGRAM OF THE SCHOOL.
(3) PROVIDES A DIFFERENT FOCUS, DELIVERY, METHODOLOGY OR
SKILL TRAINING THAN IS PROVIDED IN A TYPICAL ACADEMIC PROGRAM
OF THE SCHOOL, INCLUDING INTERNET-BASED AND DISTANCE LEARNING
TECHNOLOGIES.
(4) IS OFFERED SEPARATELY FROM THE SCHOOL CURRICULUM OR
ACADEMIC PROGRAM.
(5) IS OFFERED BEFORE OR AFTER SCHOOL HOURS, ON
WEEKENDS, AS A YEAR-ROUND PROGRAM OR AS AN EXTENSION OF THE
SCHOOL YEAR.
(6) IS OFFERED AS A STANDARDS-BASED PROGRAM OF
INSTRUCTION THAT OPERATES OUTSIDE OF THE LENGTH AND TIME
REQUIREMENTS OF THE SCHOOL BUT MEETS THE MINIMUM HOURS OR
DAYS OF INSTRUCTION REQUIRED BY STATE LAW.
(7) USES SPECIALIZED INSTRUCTIONAL MATERIALS,
INSTRUCTORS OR INSTRUCTION NOT PROVIDED BY THE SCHOOL.
(8) USES INTERNSHIPS AND OTHER WORK-BASED LEARNING
OPPORTUNITIES FOR A STUDENT THAT SUPPLEMENT THE STUDENT'S
CURRICULUM OR ACADEMIC PROGRAM AND PROVIDE THE STUDENT WITH
THE OPPORTUNITY TO APPLY THE KNOWLEDGE AND SKILLS LEARNED IN
THE ACADEMIC PROGRAM.
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(9) OFFERS INSTRUCTION OR PROGRAMMING THAT PROVIDES
CREDITS OR ADVANCED PLACEMENT AT A TWO-YEAR OR FOUR-YEAR
COLLEGE OR UNIVERSITY AUTHORIZED BY THE DEPARTMENT OF
EDUCATION.
(10) RECONFIGURES, RENOVATES OR EQUIPS A FACILITY OWNED
BY A PUBLIC SCHOOL TO CREATE A SPECIALIZED ENVIRONMENT THAT
IS INTEGRAL AND NECESSARY TO THE OPERATION OF AN EDUCATIONAL
IMPROVEMENT PROGRAM.
(11) OFFERS A CAREER AND TECHNICAL EDUCATION PROGRAM OR
ANOTHER OCCUPATIONAL-ORIENTED PROGRAM APPROVED BY THE
SECRETARY OF EDUCATION.
(12) PROVIDES SPECIAL EDUCATION PROGRAMS OR SERVICES.
(13) HAS ANY OTHER SIMILAR CHARACTERISTIC APPROVED BY
THE SECRETARY OF EDUCATION.
"ELEMENTARY SCHOOL." A SCHOOL THAT IS NOT A SECONDARY
SCHOOL.
"ELIGIBLE CONTRIBUTOR." A BUSINESS FIRM OR PASS-THROUGH
ENTITY.
"ELIGIBLE EARLY CHILDHOOD STUDENT." AN EARLY CHILDHOOD
STUDENT, INCLUDING AN ELIGIBLE STUDENT WITH A DISABILITY, WHO IS
ENROLLED IN AN EARLY CHILDHOOD PROGRAM AND IS A MEMBER OF A
HOUSEHOLD WITH A HOUSEHOLD INCOME OF NOT MORE THAN THE MAXIMUM
ANNUAL HOUSEHOLD INCOME.
"ELIGIBLE NONPROFIT ENTITY." AN ORGANIZATION THAT IS EXEMPT
FROM FEDERAL TAXATION UNDER SECTION 501(C)(3) OF THE INTERNAL
REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 501(C)(3))
AND LOCATED IN THIS COMMONWEALTH.
"ELIGIBLE STUDENT." A SCHOOL-AGE STUDENT, INCLUDING AN
ELIGIBLE STUDENT WITH A DISABILITY, WHO IS ENROLLED IN A SCHOOL
AND IS A MEMBER OF A HOUSEHOLD WITH A HOUSEHOLD INCOME OF NOT
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MORE THAN THE MAXIMUM ANNUAL HOUSEHOLD INCOME.
"ELIGIBLE STUDENT WITH A DISABILITY." AN EARLY CHILDHOOD
STUDENT OR SCHOOL-AGE STUDENT WHO MEETS ALL OF THE FOLLOWING:
(1) HAS BEEN IDENTIFIED, IN ACCORDANCE WITH 22 PA. CODE
CH. 14 (RELATING TO SPECIAL EDUCATION SERVICES AND PROGRAMS),
AS A CHILD WITH A DISABILITY AS DEFINED IN 34 CFR 300.8
(RELATING TO CHILD WITH A DISABILITY).
(2) NEEDS SPECIAL EDUCATION AND RELATED SERVICES.
(3) IS ENROLLED IN AN EARLY CHILDHOOD PROGRAM OR IN A
SCHOOL.
(4) IS A MEMBER OF A HOUSEHOLD WITH A HOUSEHOLD INCOME
OF NOT MORE THAN THE MAXIMUM ANNUAL HOUSEHOLD INCOME.
"FAMILY MEMBER." A PARENT, STEPPARENT, CHILD, STEPCHILD,
SPOUSE, DOMESTIC PARTNER, BROTHER, SISTER, STEPBROTHER OR
STEPSISTER.
"FISCAL YEAR." THE COMMONWEALTH'S FISCAL YEAR BEGINNING JULY
1 AND ENDING JUNE 30.
"HOUSEHOLD." AN INDIVIDUAL LIVING ALONE OR WITH ANY OF THE
FOLLOWING:
(1) A SPOUSE.
(2) A PARENT AND THE PARENT'S UNEMANCIPATED MINOR
CHILDREN.
(3) OTHER UNEMANCIPATED MINOR CHILDREN WHO ARE RELATED
BY BLOOD OR MARRIAGE.
(4) OTHER ADULTS OR UNEMANCIPATED MINOR CHILDREN LIVING
IN THE HOUSEHOLD WHO ARE DEPENDENT UPON THE INDIVIDUAL.
"HOUSEHOLD INCOME." ALL MONEY OR PROPERTY RECEIVED OF
WHATEVER NATURE AND FROM WHATEVER SOURCE DERIVED. THE TERM DOES
NOT INCLUDE ANY OF THE FOLLOWING:
(1) PERIODIC PAYMENTS FOR SICKNESS AND DISABILITY OTHER
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THAN REGULAR WAGES RECEIVED DURING A PERIOD OF SICKNESS OR
DISABILITY.
(2) DISABILITY, RETIREMENT OR OTHER PAYMENTS ARISING
UNDER WORKERS' COMPENSATION ACTS, OCCUPATIONAL DISEASE ACTS
AND SIMILAR LEGISLATION BY ANY GOVERNMENT.
(3) PAYMENTS COMMONLY RECOGNIZED AS OLD-AGE OR
RETIREMENT BENEFITS PAID TO AN INDIVIDUAL RETIRED FROM
SERVICE AFTER REACHING A SPECIFIC AGE OR AFTER A STATED
PERIOD OF EMPLOYMENT.
(4) PAYMENTS COMMONLY KNOWN AS PUBLIC ASSISTANCE OR
UNEMPLOYMENT COMPENSATION PAYMENTS BY A GOVERNMENTAL AGENCY.
(5) PAYMENTS TO REIMBURSE ACTUAL EXPENSES.
(6) PAYMENTS MADE BY EMPLOYERS OR LABOR UNIONS FOR
PROGRAMS COVERING HOSPITALIZATION, SICKNESS, DISABILITY OR
DEATH, SUPPLEMENTAL UNEMPLOYMENT BENEFITS, STRIKE BENEFITS,
SOCIAL SECURITY OR RETIREMENT.
(7) COMPENSATION RECEIVED BY UNITED STATES SERVICEMEN
SERVING IN A COMBAT ZONE.
(8) PAYMENTS RECEIVED FROM A GOVERNMENTAL AGENCY TO
RELIEVE THE ECONOMIC EFFECTS OF THE COVID-19 PANDEMIC.
"KINDERGARTEN." A ONE-YEAR FORMAL EDUCATIONAL PROGRAM THAT
OCCURS DURING THE SCHOOL YEAR IMMEDIATELY PRIOR TO FIRST GRADE.
THE TERM INCLUDES A PART-TIME AND FULL-TIME PROGRAM.
"LOW-ACHIEVING SCHOOL." A PUBLIC SCHOOL THAT RANKED IN THE
LOWEST 15% OF THE SCHOOL'S DESIGNATION AS AN ELEMENTARY SCHOOL
OR A SECONDARY SCHOOL BASED ON COMBINED MATHEMATICS AND READING
SCORES FROM THE ASSESSMENT ADMINISTERED IN ANY OF THE PREVIOUS
FIVE SCHOOL YEARS AND FOR WHICH THE DEPARTMENT OF EDUCATION HAS
POSTED RESULTS ON THE DEPARTMENT OF EDUCATION'S PUBLICLY
ACCESSIBLE INTERNET WEBSITE. THE TERM DOES NOT INCLUDE A CHARTER
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SCHOOL, CYBER CHARTER SCHOOL OR CAREER AND TECHNICAL SCHOOL.
"MAXIMUM ANNUAL HOUSEHOLD INCOME." THE AMOUNT CALCULATED AS
FOLLOWS:
(1) SUBJECT TO ADJUSTMENT UNDER PARAGRAPHS (2), (3) AND
(4), $120,000.
(2) FOR EACH ELIGIBLE STUDENT, ELIGIBLE EARLY CHILDHOOD
STUDENT AND DEPENDENT MEMBER OF THE HOUSEHOLD , THE AMOUNT
UNDER PARAGRAPH (1) PLUS 10% OF THE AMOUNT UNDER PARAGRAPH
(1).
(3) FOR EACH ELIGIBLE STUDENT WITH A DISABILITY, THE
AMOUNT CALCULATED BY MULTIPLYING THE APPLICABLE AMOUNT UNDER
PARAGRAPH (1) BY 1.5.
(4) BEGINNING JULY 1, 2029, THE DEPARTMENT SHALL
ANNUALLY ADJUST THE INCOME AMOUNT UNDER PARAGRAPH (1) BY THE
PERCENTAGE CHANGE IN THE MINIMUM WAGE UNDER THE ACT OF
JANUARY 17, 1968 (P.L.11, NO.5), KNOWN AS THE MINIMUM WAGE
ACT OF 1968, FROM THE PRECEDING CALENDAR YEAR.
"NONPUBLIC SCHOOL." A NONPROFIT SCHOOL, OTHER THAN A PUBLIC
SCHOOL, IN WHICH A RESIDENT OF THIS COMMONWEALTH MAY LEGALLY
FULFILL THE COMPULSORY SCHOOL ATTENDANCE REQUIREMENTS UNDER THIS
ACT AND WHICH MEETS THE REQUIREMENTS OF TITLE VI OF THE CIVIL
RIGHTS ACT OF 1964 (PUBLIC LAW 88-352, 42 U.S.C. § 2000 ET
SEQ.).
"PARENT." AN INDIVIDUAL WHO IS A RESIDENT OF THIS
COMMONWEALTH AND MEETS ANY OF THE FOLLOWING:
(1) HAS LEGAL CUSTODY OR GUARDIANSHIP OF A STUDENT.
(2) KEEPS A STUDENT IN THE INDIVIDUAL'S HOME AND
SUPPORTS THE STUDENT GRATIS AS IF THE STUDENT WERE A LINEAL
DESCENDANT OF THE INDIVIDUAL.
"PARTICIPATING NONPUBLIC SCHOOL." A NONPUBLIC SCHOOL THAT IS
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ELIGIBLE UNDER SECTION 1711-F TO ACCEPT RECIPIENTS.
"PARTICIPATING PUBLIC SCHOOL." A PUBLIC SCHOOL IN A SCHOOL
DISTRICT THAT IS ELIGIBLE UNDER SECTION 1711-F TO ACCEPT
RECIPIENTS. THE TERM DOES NOT INCLUDE A LOW-ACHIEVING SCHOOL.
"PASS-THROUGH ENTITY." A PARTNERSHIP AS DEFINED IN SECTION
301(N.0), A SINGLE-MEMBER LIMITED LIABILITY COMPANY TREATED AS A
DISREGARDED ENTITY FOR FEDERAL INCOME TAX PURPOSES OR A
PENNSYLVANIA S CORPORATION AS DEFINED IN SECTION 301(N.1). THE
TERM INCLUDES A PASS-THROUGH ENTITY THAT OWNS AN INTEREST IN A
PASS-THROUGH ENTITY. THE TERM INCLUDES A QUALIFIED SUBCHAPTER S
TRUST. THE TERM INCLUDES A PASS-THROUGH ENTITY THE PURPOSE OF
WHICH IS MAKING CONTRIBUTIONS UNDER THIS ARTICLE AND WHOSE
SHAREHOLDERS, PARTNERS OR MEMBERS ARE COMPOSED OF OWNERS OR
EMPLOYEES OF BUSINESS FIRMS.
"PUBLIC SCHOOL." A PUBLIC PREKINDERGARTEN AT WHICH
COMPULSORY ATTENDANCE REQUIREMENTS DO NOT APPLY OR A PUBLIC
KINDERGARTEN, ELEMENTARY SCHOOL, SECONDARY SCHOOL OR CAREER AND
TECHNICAL SCHOOL AT WHICH THE COMPULSORY ATTENDANCE REQUIREMENTS
OF THIS COMMONWEALTH MAY BE MET AND WHICH MEETS THE APPLICABLE
REQUIREMENTS OF TITLE VI OF THE CIVIL RIGHTS ACT OF 1964 (PUBLIC
LAW 88-352, 42 U.S.C. § 2000 ET SEQ.).
"QUALIFIED SUBCHAPTER S TRUST." AS DEFINED IN SECTION
1361(D) OF THE INTERNAL REVENUE CODE OF 1986.
"RECIPIENT." AN APPLICANT WHO RECEIVES A SCHOLARSHIP.
"SCHOLARSHIP." AN AWARD UNDER A SCHOLARSHIP PROGRAM,
ECONOMICALLY DISADVANTAGED SCHOLARSHIP PROGRAM OR EARLY
CHILDHOOD SCHOLARSHIP PROGRAM TO PAY TUITION AND SCHOOL-RELATED
FEES TO ATTEND A PARTICIPATING PUBLIC SCHOOL, PARTICIPATING
NONPUBLIC SCHOOL OR EARLY CHILDHOOD PROGRAM.
"SCHOLARSHIP GRANTING ORGANIZATION." AN ELIGIBLE NONPROFIT
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ENTITY THAT HAS BEEN APPROVED BY THE DEPARTMENT TO OPERATE A
SCHOLARSHIP PROGRAM, EARLY CHILDHOOD SCHOLARSHIP PROGRAM,
ECONOMICALLY DISADVANTAGED SCHOLARSHIP PROGRAM OR EDUCATIONAL
IMPROVEMENT PROGRAM UNDER THIS ARTICLE.
"SCHOLARSHIP PROGRAM." A PROGRAM THAT PROVIDES SCHOLARSHIPS
TO ELIGIBLE STUDENTS TO ATTEND A PARTICIPATING PUBLIC SCHOOL OR
PARTICIPATING NONPUBLIC SCHOOL LOCATED IN THIS COMMONWEALTH. THE
TERM INCLUDES A PROGRAM THAT HAS AN APPLICATION AND REVIEW
PROCESS FOR MAKING AWARDS TO ELIGIBLE STUDENTS AND AWARDS
SCHOLARSHIPS TO ELIGIBLE STUDENTS WITHOUT LIMITING AVAILABILITY
TO STUDENTS OF ONE SCHOOL OR ONE BUILDING WITHIN A SCHOOL
DISTRICT OR NONPUBLIC SCHOOL.
"SCHOOL." ANY OF THE FOLLOWING THAT MEETS THE APPLICABLE
REQUIREMENTS OF TITLE VI OF THE CIVIL RIGHTS ACT OF 1964:
(1) A PUBLIC OR NONPUBLIC PREKINDERGARTEN.
(2) A PUBLIC OR NONPUBLIC KINDERGARTEN, ELEMENTARY
SCHOOL OR SECONDARY SCHOOL AT WHICH THE COMPULSORY ATTENDANCE
REQUIREMENTS OF THIS COMMONWEALTH MAY BE MET.
"SCHOOL AGE." CHILDREN FROM THE EARLIEST ADMISSION AGE TO A
SCHOOL'S KINDERGARTEN PROGRAM OR, IF NO PREKINDERGARTEN OR
KINDERGARTEN PROGRAM IS PROVIDED, THE SCHOOL'S EARLIEST
ADMISSION AGE FOR BEGINNERS, UNTIL THE END OF THE SCHOOL YEAR IN
WHICH THE STUDENT ATTAINS 21 YEARS OF AGE OR GRADUATES FROM HIGH
SCHOOL, WHICHEVER OCCURS FIRST.
"SCHOOL DISTRICT OF RESIDENCE." THE SCHOOL DISTRICT IN WHICH
A STUDENT'S PRIMARY DOMICILE IS LOCATED.
"SCHOOL-RELATED FEES." FEES CHARGED BY A SCHOOL TO ALL
STUDENTS FOR BOOKS, INSTRUCTIONAL MATERIALS, TECHNOLOGY
EQUIPMENT AND SERVICES, UNIFORMS, ACTIVITIES AND CONCURRENT
ENROLLMENT PROGRAMS UNDER ARTICLE XVI-B OF THE PUBLIC SCHOOL
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CODE OF 1949.
"SECONDARY SCHOOL." A SCHOOL WITH AN ELEVENTH GRADE.
"STUDENT." AN INDIVIDUAL WHO MEETS ALL OF THE FOLLOWING:
(1) IS SCHOOL AGE.
(2) IS A RESIDENT OF THIS COMMONWEALTH.
(3) ATTENDS OR IS ABOUT TO ATTEND A SCHOOL.
"TAX YEAR." A TAXPAYER'S ANNUAL ACCOUNTING PERIOD OR, IF A
RETURN IS MADE FOR A PERIOD OF LESS THAN 12 MONTHS, THE PERIOD
FOR WHICH THE RETURN IS MADE.
SECTION 1703-F. ADMINISTRATION AND ACCOUNTABILITY.
(A) DUTIES OF DEPARTMENT.--THE DEPARTMENT SHALL HAVE THE
FOLLOWING DUTIES:
(1) ESTABLISH GUIDELINES NECESSARY TO IMPLEMENT THIS
ARTICLE.
(2) ESTABLISH THE PROCESS THROUGH WHICH AND CRITERIA BY
WHICH AN ELIGIBLE NONPROFIT ENTITY MAY APPLY AND RECEIVE
APPROVAL TO OPERATE AS A SCHOLARSHIP GRANTING ORGANIZATION.
(3) DEVELOP GUIDELINES, IN CONSULTATION WITH THE
DEPARTMENT OF EDUCATION, FOR THE ELIGIBILITY OF AN
EDUCATIONAL IMPROVEMENT PROGRAM.
(4) ESTABLISH THE PROCESS THROUGH WHICH AN ELIGIBLE
CONTRIBUTOR MAY APPLY FOR A TAX CREDIT UNDER SECTION 1705-F.
(5) BY JANUARY 1 OF EACH YEAR, PUBLISH A LIST OF
SCHOLARSHIP GRANTING ORGANIZATIONS APPROVED TO OPERATE DURING
THE FOLLOWING FISCAL YEAR.
(6) MONITOR SCHOLARSHIP GRANTING ORGANIZATIONS FOR
COMPLIANCE WITH THIS ARTICLE AND PUBLISH COMPLIANCE
INFORMATION ON THE DEPARTMENT'S PUBLICLY ACCESSIBLE INTERNET
WEBSITE IN A DOWNLOADABLE SPREADSHEET FORMAT.
(7) PUBLISH REPORTS IN ACCORDANCE WITH SECTION 1713-
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F(E).
(8) NO LATER THAN NOVEMBER 1, 2028, AND EACH NOVEMBER 1
THEREAFTER, IN CONSULTATION WITH THE DEPARTMENT OF REVENUE,
PUBLISH A LIST IN A DOWNLOADABLE SPREADSHEET FORMAT ON THE
DEPARTMENT'S PUBLICLY ACCESSIBLE INTERNET WEBSITE OF THE
CONTRIBUTIONS OF EACH ELIGIBLE CONTRIBUTOR MADE UNDER THIS
ARTICLE BY SCHOLARSHIP GRANTING ORGANIZATION AND BY PROGRAM
CATEGORY, INCLUDING SCHOLARSHIP PROGRAM, ECONOMICALLY
DISADVANTAGED SCHOLARSHIP PROGRAM, EARLY CHILDHOOD
SCHOLARSHIP PROGRAM OR EDUCATIONAL IMPROVEMENT PROGRAM, AS
APPLICABLE.
(B) DUTIES OF DEPARTMENT OF EDUCATION.--THE DEPARTMENT OF
EDUCATION SHALL HAVE THE FOLLOWING DUTIES:
(1) PUBLISH THE LISTS OF PARTICIPATING NONPUBLIC SCHOOLS
AND PARTICIPATING PUBLIC SCHOOLS UNDER SECTION 1711-F ON THE
DEPARTMENT OF EDUCATION'S PUBLICLY ACCESSIBLE INTERNET
WEBSITE IN A DOWNLOADABLE SPREADSHEET FORMAT.
(2) ANNUALLY PUBLISH A LIST OF LOW-ACHIEVING SCHOOLS
UNDER SECTION 1710-F ON THE DEPARTMENT OF EDUCATION'S
PUBLICLY ACCESSIBLE INTERNET WEBSITE IN A DOWNLOADABLE
SPREADSHEET FORMAT.
(3) FOR THE PURPOSES OF ECONOMICALLY DISADVANTAGED
SCHOLARSHIP PROGRAMS, ANNUALLY DETERMINE AND PUBLISH A LIST
OF PARTICIPATING NONPUBLIC SCHOOLS THAT MEET BOTH OF THE
FOLLOWING CRITERIA:
(I) THE PARTICIPATING NONPUBLIC SCHOOL IS LOCATED IN
A ZIP CODE WITH A MEDIAN HOUSEHOLD INCOME, BASED ON THE
MOST RECENT CENSUS DATA, OF LESS THAN HALF THE MAXIMUM
ANNUAL HOUSEHOLD INCOME.
(II) THE PARTICIPATING NONPUBLIC SCHOOL HAS A
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TUITION RATE BELOW THE MEDIAN TUITION RATE BASED ON DATA
SUBMITTED UNDER SECTION 1711-F.
(C) DUTIES OF DEPARTMENT OF REVENUE.--THE DEPARTMENT OF
REVENUE SHALL HAVE THE FOLLOWING DUTIES:
(1) REVIEW APPLICATIONS AS PROVIDED UNDER SECTION 1705-
F.
(2) NO LATER THAN NOVEMBER 1, 2028, AND EACH NOVEMBER 1
THEREAFTER, PROVIDE THE GENERAL ASSEMBLY WITH A LIST OF THE
10 SHAREHOLDERS, PARTNERS OR MEMBERS OF PASS-THROUGH ENTITIES
WITH THE HIGHEST AGGREGATE AMOUNT OF CONTRIBUTIONS UNDER THIS
ARTICLE FOR THE PRIOR FISCAL YEAR.
(3) BY JUNE 30 OF EACH YEAR, PROVIDE THE GENERAL
ASSEMBLY WITH A LIST OF THE 10 SHAREHOLDERS, PARTNERS OR
MEMBERS OF PASS-THROUGH ENTITIES WITH THE HIGHEST AGGREGATE
AMOUNT OF CONTRIBUTIONS UNDER THIS ARTICLE.
(D) DUTIES OF AUDITOR GENERAL.--THE AUDITOR GENERAL SHALL
HAVE THE FOLLOWING DUTIES:
(1) CONDUCT A COMPLIANCE AUDIT OF THE AFFAIRS AND
ACTIVITIES OF A SCHOLARSHIP GRANTING ORGANIZATION.
(2) CONDUCT A COMPLIANCE AUDIT OF A PARTICIPATING
NONPUBLIC SCHOOL RELATED TO THE REQUIREMENTS UNDER SECTION
1711-F.
(3) PUBLISH THE AUDITS UNDER PARAGRAPHS (1) AND (2) ON
THE AUDITOR GENERAL'S PUBLICLY ACCESSIBLE INTERNET WEBSITE.
(E) DUTIES OF INDEPENDENT FISCAL OFFICE.--THE INDEPENDENT
FISCAL OFFICE SHALL HAVE THE FOLLOWING DUTIES:
(1) BEGINNING WITH INFORMATION REPORTED FOR THE 2027-
2028 FISCAL YEAR, PUBLISH ON ITS PUBLICLY ACCESSIBLE INTERNET
WEBSITE A REPORT OF A REVIEW OF THE EDUCATION OPTIONS TAX
CREDIT ESTABLISHED UNDER THIS ARTICLE EVERY FIVE YEARS.
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(2) INCLUDE ALL OF THE FOLLOWING IN THE REPORT UNDER
PARAGRAPH (1):
(I) THE COSTS OF PROVIDING THE TAX CREDIT, INCLUDING
ADMINISTRATIVE COSTS TO THE COMMONWEALTH AND LOST
REVENUES TO THE COMMONWEALTH.
(II) AN ANALYSIS OF ELIGIBLE CONTRIBUTORS BY
CONTRIBUTIONS MADE, REGION AND TYPE.
(III) AN ANALYSIS OF SCHOLARSHIP GRANTING
ORGANIZATIONS BY CONTRIBUTIONS RECEIVED, REGION AND TYPE
OF PROGRAM SUPPORTED.
(IV) AN ANALYSIS OF THE DATA REPORTED UNDER SECTION
1713-F.
(V) TO THE EXTENT POSSIBLE, AN ANALYSIS OF CHANGES
IN EDUCATIONAL OUTCOMES.
(VI) RECOMMENDATIONS ON HOW THE TAX CREDIT COULD BE
MORE EFFICIENTLY IMPLEMENTED OR EVALUATED.
(F) ACCOUNT.--
(1) THE ACCOUNTABILITY FOR DIVERTED TAX DOLLARS
RESTRICTED ACCOUNT IS ESTABLISHED AS A RESTRICTED ACCOUNT IN
THE GENERAL FUND.
(2) MONEY IN THE ACCOUNT IS APPROPRIATED ON A CONTINUING
BASIS AS FOLLOWS:
(I) 40% TO THE DEPARTMENT TO OFFSET COSTS ASSOCIATED
WITH ADMINISTERING THIS ARTICLE.
(II) 20% TO THE DEPARTMENT OF REVENUE TO OFFSET
COSTS ASSOCIATED WITH ADMINISTERING THIS ARTICLE.
(III) 20% TO THE AUDITOR GENERAL TO OFFSET THE COSTS
OF CONDUCTING AUDITS UNDER SUBSECTION (D).
(IV) 20% TO THE DEPARTMENT OF EDUCATION TO OFFSET
COSTS ASSOCIATED WITH ADMINISTERING THIS ARTICLE.
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(3) THE STATE TREASURER MAY ACCEPT APPROPRIATIONS,
TRANSFERS, GIFTS, DONATIONS, LEGACIES OR OTHER REVENUES,
INCLUDING ALLOWABLE FEDERAL FUNDS, FOR DEPOSIT INTO THE
ACCOUNT. INTEREST THAT ACCRUES IN THE ACCOUNT SHALL REMAIN IN
THE ACCOUNT.
SECTION 1704-F. SCHOLARSHIP GRANTING ORGANIZATIONS.
(A) REQUIREMENTS.--
(1) A SCHOLARSHIP GRANTING ORGANIZATION SHALL HAVE THE
FOLLOWING DUTIES:
(I) CONTRIBUTE AT LEAST 90% OF ITS ANNUAL CASH
RECEIPTS TO A SCHOLARSHIP PROGRAM, EARLY CHILDHOOD
SCHOLARSHIP PROGRAM, ECONOMICALLY DISADVANTAGED
SCHOLARSHIP PROGRAM OR EDUCATIONAL IMPROVEMENT PROGRAM,
OR CONTRIBUTE AT LEAST 85% OF ITS ANNUAL CASH RECEIPTS IF
THE SCHOLARSHIP GRANTING ORGANIZATION REPORTS AN ANNUAL
INTERNAL REVENUE SERVICE PROGRAM EXPENSE PERCENTAGE OF
GREATER THAN 90% ON THE SCHOLARSHIP GRANTING
ORGANIZATION'S INTERNAL REVENUE SERVICE FORM 990 FILING.
(II) PROVIDE AN APPLICATION AND REVIEW PROCESS FOR
SCHOLARSHIP APPLICANTS THAT INCLUDES A MEANS OF VERIFYING
HOUSEHOLD INCOME, WHICH MAY INCLUDE SUBMISSION OF THE
HOUSEHOLD MEMBERS' MOST RECENTLY AVAILABLE FEDERAL OR
STATE TAX RETURNS, IF THE HOUSEHOLD MEMBERS ARE REQUIRED
TO FILE THE RETURNS.
(III) REFRAIN FROM EARMARKING A CONTRIBUTION BY AN
ELIGIBLE CONTRIBUTOR FOR A SPECIFIC STUDENT.
(IV) REFRAIN FROM PROVIDING A SCHOLARSHIP TO A
FAMILY MEMBER OF A PERSON RECEIVING COMPENSATION FROM OR
INVOLVED IN THE GOVERNANCE OF THE SCHOLARSHIP GRANTING
ORGANIZATION.
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(V) REFRAIN FROM AWARDING A SCHOLARSHIP TO AN
APPLICANT FOR ENROLLMENT IN A HOME EDUCATION PROGRAM
UNDER SECTION 1327.1 OF THE PUBLIC SCHOOL CODE OF 1949.
(VI) REFRAIN FROM AWARDING A SCHOLARSHIP TO AN
APPLICANT TO ATTEND A SCHOOL THAT IS NOT ON THE LIST
UNDER SECTION 1711-F.
(VII) TIMELY REPORT THE INFORMATION REQUIRED UNDER
SECTION 1713-F TO THE DEPARTMENT.
(VIII) REMIT 2% OF ITS TOTAL CONTRIBUTIONS UNDER
THIS ARTICLE TO THE DEPARTMENT FOR DEPOSIT INTO THE
ACCOUNT.
(IX) MAINTAIN SEPARATE ACCOUNTS IN ITS BUDGET TO
FACILITATE MONITORING AND AUDITING OF THE USE OF
CONTRIBUTIONS.
(2) FOR PURPOSES OF PARAGRAPH (1)(I), A SCHOLARSHIP
GRANTING ORGANIZATION CONTRIBUTES ITS ANNUAL CASH RECEIPTS TO
A SCHOLARSHIP PROGRAM, EARLY CHILDHOOD SCHOLARSHIP PROGRAM,
ECONOMICALLY DISADVANTAGED SCHOLARSHIP PROGRAM OR EDUCATIONAL
IMPROVEMENT PROGRAM WHEN THE SCHOLARSHIP GRANTING
ORGANIZATION EXPENDS OR OTHERWISE IRREVOCABLY ENCUMBERS THE
FUNDS FOR DISTRIBUTION DURING THE THEN-CURRENT FISCAL YEAR OF
THE SCHOLARSHIP GRANTING ORGANIZATION OR DURING THE NEXT
SUCCEEDING FISCAL YEAR OF THE SCHOLARSHIP GRANTING
ORGANIZATION.
(B) ALLOWABLE USES FOR CONTRIBUTIONS NOT USED TO FUND
SCHOLARSHIPS OR EDUCATIONAL IMPROVEMENT PROGRAMS.--A SCHOLARSHIP
GRANTING ORGANIZATION MAY USE CONTRIBUTIONS NOT USED TO FUND
SCHOLARSHIPS OR EDUCATIONAL IMPROVEMENT PROGRAMS FOR ANY OF THE
FOLLOWING:
(1) OVERHEAD COSTS DIRECTLY RELATED TO THE
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ADMINISTRATION OF A SCHOLARSHIP PROGRAM, EARLY CHILDHOOD
SCHOLARSHIP PROGRAM, ECONOMICALLY DISADVANTAGED SCHOLARSHIP
PROGRAM OR EDUCATIONAL IMPROVEMENT PROGRAM, INCLUDING ANY OF
THE FOLLOWING:
(I) PERSONNEL COSTS FOR EMPLOYEES WHO WORK REGULARLY
IN THE COMMONWEALTH.
(II) OPERATIONAL COSTS FOR OFFICE SPACE LOCATED IN
THIS COMMONWEALTH.
(2) PAYMENT FOR THIRD-PARTY HOUSEHOLD INCOME VALIDATION
RELATED TO MAXIMUM ANNUAL HOUSEHOLD INCOME REQUIREMENTS.
(3) ANOTHER USE DEEMED APPROPRIATE BY THE DEPARTMENT FOR
THE PURPOSES OF THIS ARTICLE.
(C) NONCOMPLIANCE.--A SCHOLARSHIP GRANTING ORGANIZATION,
INCLUDING ITS SUCCESSOR ORGANIZATION, THAT FAILS TO COMPLY WITH
SUBSECTION (A) OR USES CONTRIBUTIONS FOR A PURPOSE NOT
AUTHORIZED UNDER SUBSECTION (B) MAY NOT PARTICIPATE IN THE
EDUCATION OPTIONS TAX CREDIT PROGRAM FOR THE TWO FISCAL YEARS
IMMEDIATELY FOLLOWING THE FISCAL YEAR IN WHICH THE SCHOLARSHIP
GRANTING ORGANIZATION FAILED TO MEET THE REQUIREMENT.
SECTION 1705-F. APPLICATION BY ELIGIBLE CONTRIBUTORS.
(A) APPLICATION.--
(1) AN ELIGIBLE CONTRIBUTOR SHALL APPLY TO THE
DEPARTMENT ON A FORM AND IN A MANNER DETERMINED BY THE
DEPARTMENT FOR AN EDUCATION OPTIONS TAX CREDIT FOR
CONTRIBUTIONS TO A SCHOLARSHIP GRANTING ORGANIZATION UNDER
SECTION 1706-F.
(2) THE DEPARTMENT MAY ACCEPT APPLICATIONS FOR TAX
CREDITS AVAILABLE DURING A FISCAL YEAR NO EARLIER THAN JULY 1
OF EACH FISCAL YEAR.
(3) AT A MINIMUM, THE APPLICATION MUST INCLUDE THE
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ELIGIBLE CONTRIBUTOR'S NAME, ADDRESS, STATUS AS A BUSINESS
FIRM OR PASS-THROUGH ENTITY AND CONTRIBUTION AMOUNT BY
PROGRAM UNDER SECTION 1707-F(A).
(4) THE DEPARTMENT SHALL MAKE TAX CREDITS UNDER THIS
ARTICLE AVAILABLE ON A FIRST-COME, FIRST-SERVED BASIS WITHIN
THE LIMITATION SPECIFIED UNDER SECTION 1707-F(A).
(5) THE DEPARTMENT SHALL MAINTAIN A WAITING LIST
CONSISTING OF EACH ELIGIBLE CONTRIBUTOR THAT CHOOSES TO BE
INCLUDED ON THE LIST AND WHOSE APPLICATION HAS NOT BEEN
CONDITIONALLY APPROVED BECAUSE ALL AVAILABLE TAX CREDITS HAVE
BEEN AWARDED.
(B) REVIEW.--
(1) THE DEPARTMENT SHALL PROVIDE THE DEPARTMENT OF
REVENUE WITH THE LIST OF ELIGIBLE CONTRIBUTORS THAT SUBMITTED
AN APPLICATION UNDER SUBSECTION (A).
(2) THE DEPARTMENT OF REVENUE SHALL CONDUCT COMPLIANCE
CHECKS ON THE ELIGIBLE CONTRIBUTORS SUBMITTED BY THE
DEPARTMENT UNDER PARAGRAPH (1) AND TAKE THE FOLLOWING
ACTIONS:
(I) IF THE TAXPAYER IS COMPLIANT, COMMUNICATE A
CLEARANCE STATUS TO THE DEPARTMENT.
(II) IF THE TAXPAYER IS NOT COMPLIANT, ISSUE A
NONCOMPLIANCE LETTER TO THE TAXPAYER AND PROVIDE THE
TAXPAYER WITH A REASONABLE OPPORTUNITY TO RESOLVE THE
COMPLIANCE ISSUE.
(III) IF THE TAXPAYER DOES NOT RESOLVE THE
COMPLIANCE ISSUE, COMMUNICATE A FINAL NONCOMPLIANCE
STATUS TO THE DEPARTMENT, AND THE TAXPAYER SHALL BE
INELIGIBLE FOR THE TAX CREDIT.
(C) CONDITIONAL APPROVAL.--
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(1) SUBJECT TO THE LIMITATIONS UNDER SECTIONS 1706-F AND
1707-F, UPON RECEIPT OF A CLEARANCE STATUS UNDER SUBSECTION
(B)(2)(I), THE DEPARTMENT SHALL NOTIFY THE ELIGIBLE
CONTRIBUTOR THAT CONDITIONAL CREDITS HAVE BEEN RESERVED AND
SHALL INFORM THE ELIGIBLE CONTRIBUTOR OF THE REQUIREMENTS
UNDER SUBSECTION (D).
(2) UNLESS OTHERWISE REQUESTED BY THE ELIGIBLE
CONTRIBUTOR AND AGREED TO BY THE ELIGIBLE CONTRIBUTOR AND THE
DEPARTMENT, AND UNLESS ALL AUTHORIZED CREDITS HAVE ALREADY
BEEN AWARDED, THE DEPARTMENT SHALL GIVE WRITTEN NOTICE OF ITS
CONDITIONAL APPROVAL TO EACH ELIGIBLE CONTRIBUTOR THAT
SUBMITTED A COMPLETED APPLICATION UNDER SUBSECTION (A) BY
AUGUST 30, OR 30 DAYS FOLLOWING RECEIPT OF THE COMPLETED
APPLICATION, WHICHEVER IS LATER.
(3) IF THE DEPARTMENT FAILS FOR A PERIOD OF AT LEAST 10
DAYS TO TIMELY TRANSMIT A WRITTEN NOTICE REQUIRED UNDER THIS
SUBSECTION, THE AFFECTED ELIGIBLE CONTRIBUTOR MAY BRING AN
ACTION FOR INJUNCTIVE OR OTHER APPROPRIATE RELIEF IN
COMMONWEALTH COURT.
(D) CONTRIBUTIONS.--TO RECEIVE A TAX CREDIT UNDER THIS
ARTICLE, AN ELIGIBLE CONTRIBUTOR SHALL MAKE THE CONTRIBUTION TO
A SCHOLARSHIP GRANTING ORGANIZATION THAT APPEARS ON THE LIST
REQUIRED UNDER SECTION 1703-F(A)(5) NO LATER THAN 60 DAYS AFTER
THE DATE OF THE CONDITIONAL APPROVAL NOTICE RECEIVED UNDER
SUBSECTION (C).
(E) PROOF OF CONTRIBUTION.--
(1) AN ELIGIBLE CONTRIBUTOR SHALL PROVIDE PROOF OF
CONTRIBUTION TO THE DEPARTMENT ON A FORM AND IN A MANNER
DETERMINED BY THE DEPARTMENT.
(2) IF AN ELIGIBLE CONTRIBUTOR DOES NOT MAKE A MINIMUM
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OF 50% OF THE FULL AMOUNT OF THE CONDITIONALLY APPROVED
CONTRIBUTION, THE ELIGIBLE CONTRIBUTOR'S TAX CREDIT
APPLICATION MAY NOT BE APPROVED IN THE IMMEDIATELY SUCCEEDING
FISCAL YEAR.
(3) UPON RECEIVING SATISFACTORY PROOF OF CONTRIBUTION,
THE DEPARTMENT SHALL NOTIFY THE DEPARTMENT OF REVENUE.
(F) REALLOCATION.--UNAWARDED TAX CREDITS MAY NOT BE
REALLOCATED TO ANY OF THE CATEGORIES OF PROGRAMS.
(G) APPLICATION IN THE ALTERNATIVE.--AT THE TIME OF
APPLICATION FOR A TAX CREDIT UNDER THIS ARTICLE, THE DEPARTMENT
SHALL ADVISE AN ELIGIBLE CONTRIBUTOR THAT THE ELIGIBLE
CONTRIBUTOR MAY ELECT THAT ITS APPLICATION FOR A PARTICULAR TAX
CREDIT WILL, IN THE ALTERNATIVE, BE DEEMED AN APPLICATION
RECEIVED BY THE DEPARTMENT ON THE SAME DATE AS THE PREFERRED
APPLICATION, BUT FOR A DIFFERENT TAX CREDIT AUTHORIZED UNDER
THIS ARTICLE IF THE ELIGIBLE CONTRIBUTOR'S PREFERRED CHOICE OF
TAX CREDIT IS NOT AVAILABLE. IF AN ELIGIBLE CONTRIBUTOR DOES NOT
RECEIVE ITS PREFERRED CHOICE OF TAX CREDIT, THE DEPARTMENT SHALL
PROMPTLY CONSIDER THE ELIGIBLE CONTRIBUTOR'S ALTERNATIVE
APPLICATION FOR A DIFFERENT TAX CREDIT AUTHORIZED UNDER THIS
ARTICLE.
SECTION 1706-F. TAX CREDITS.
(A) AWARD.--IN ACCORDANCE WITH SECTION 1707-F, THE
DEPARTMENT OF REVENUE SHALL GRANT A TAX CREDIT AGAINST AN
APPLICABLE TAX TO AN ELIGIBLE CONTRIBUTOR FOR WHICH THE
DEPARTMENT OF REVENUE HAS RECEIVED NOTICE UNDER SECTION 1705-
F(E)(3) AS FOLLOWS:
(1) THE TAX CREDIT SHALL NOT EXCEED 75% OF THE TOTAL
AMOUNT CONTRIBUTED DURING THE TAX YEAR BY AN ELIGIBLE
CONTRIBUTOR TO A SCHOLARSHIP GRANTING ORGANIZATION FOR A
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SCHOLARSHIP PROGRAM.
(2) THE TAX CREDIT SHALL NOT EXCEED 90% OF THE TOTAL
AMOUNT CONTRIBUTED DURING THE TAX YEAR BY AN ELIGIBLE
CONTRIBUTOR TO A SCHOLARSHIP GRANTING ORGANIZATION FOR AN
EARLY CHILDHOOD SCHOLARSHIP PROGRAM OR EDUCATIONAL
IMPROVEMENT PROGRAM.
(3) THE TAX CREDIT SHALL NOT EXCEED 99% OF THE TOTAL
AMOUNT CONTRIBUTED DURING THE TAX YEAR BY AN ELIGIBLE
CONTRIBUTOR TO A SCHOLARSHIP GRANTING ORGANIZATION FOR AN
ECONOMICALLY DISADVANTAGED SCHOLARSHIP PROGRAM.
(4) THE TAX CREDIT SHALL NOT EXCEED $750,000 ANNUALLY
PER ELIGIBLE CONTRIBUTOR FOR CONTRIBUTIONS MADE TO
SCHOLARSHIP GRANTING ORGANIZATIONS FOR SCHOLARSHIP PROGRAMS,
EARLY CHILDHOOD SCHOLARSHIP PROGRAMS OR EDUCATIONAL
IMPROVEMENT PROGRAMS.
(5) SUBJECT TO SECTION 1707-F(A)(4) AND (C), NO ANNUAL
LIMIT PER ELIGIBLE CONTRIBUTOR SHALL APPLY TO CONTRIBUTIONS
MADE TO SCHOLARSHIP GRANTING ORGANIZATIONS FOR ECONOMICALLY
DISADVANTAGED SCHOLARSHIP PROGRAMS.
(B) COMBINATION OF TAX CREDITS.--IN ACCORDANCE WITH SECTION
1707-F, AN ELIGIBLE CONTRIBUTOR MAY RECEIVE TAX CREDITS FROM THE
DEPARTMENT OF REVENUE IN A TAX YEAR FOR ANY COMBINATION OF
CONTRIBUTIONS TO SCHOLARSHIP GRANTING ORGANIZATIONS. AN ELIGIBLE
CONTRIBUTOR MAY NOT RECEIVE TAX CREDITS IN A TAX YEAR IN EXCESS
OF $750,000 FOR COMBINED CONTRIBUTIONS TO SCHOLARSHIP GRANTING
ORGANIZATIONS FOR SCHOLARSHIP PROGRAMS, EARLY CHILDHOOD
SCHOLARSHIP PROGRAMS OR EDUCATIONAL IMPROVEMENT PROGRAMS.
(C) PASS-THROUGH ENTITY.--
(1) A PASS-THROUGH ENTITY MAY ELECT IN WRITING TO
DISTRIBUTE FOR NO CONSIDERATION ALL OR A PORTION OF THE
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CREDIT TO SHAREHOLDERS, MEMBERS OR PARTNERS IN PROPORTION TO
THE PERCENTAGE INTEREST OF THE SHAREHOLDER, MEMBER OR PARTNER
IN DISTRIBUTIONS FROM THE PASS-THROUGH ENTITY. THE
SHAREHOLDERS, MEMBERS OR PARTNERS MAY USE THE CREDITS IN THE
TAX YEAR IN WHICH THE CONTRIBUTION IS MADE OR IN THE TAX YEAR
IMMEDIATELY FOLLOWING THE YEAR IN WHICH THE CONTRIBUTION IS
MADE. THE ELECTION SHALL DESIGNATE THE TAX YEAR IN WHICH THE
DISTRIBUTED CREDITS ARE TO BE USED AND SHALL BE MADE
ACCORDING TO PROCEDURES ESTABLISHED BY THE DEPARTMENT OF
REVENUE. A PASS-THROUGH ENTITY THAT RECEIVED A DISTRIBUTION
FROM A PASS-THROUGH ENTITY UNDER THIS PARAGRAPH MAY MAKE A
DISTRIBUTION UNDER THIS PARAGRAPH.
(2) A PASS-THROUGH ENTITY AND A SHAREHOLDER, MEMBER OR
PARTNER OF A PASS-THROUGH ENTITY MAY NOT CLAIM THE CREDIT
UNDER THIS SECTION FOR THE SAME CONTRIBUTION.
(3) A SHAREHOLDER, MEMBER OR PARTNER MAY NOT CARRY
FORWARD, CARRY BACK, OBTAIN A REFUND OF, SELL OR ASSIGN THE
CREDIT.
(4) AN INDIVIDUAL SHAREHOLDER, PARTNER OR MEMBER MAY
APPLY A CREDIT DISTRIBUTED UNDER THIS SECTION TO INCOME
TAXABLE UNDER ARTICLE III TO THE SHAREHOLDER, PARTNER OR
MEMBER, TO THE SPOUSE OF THE SHAREHOLDER, PARTNER OR MEMBER
OR TO BOTH, IF BOTH THE SHAREHOLDER, PARTNER OR MEMBER AND
THE SPOUSE REPORT INCOME ON A JOINT PERSONAL INCOME TAX
RETURN.
(D) RESTRICTION.--NO CREDIT GRANTED UNDER THIS SECTION MAY
BE APPLIED AGAINST A TAX WITHHELD BY AN EMPLOYER FROM AN
EMPLOYEE UNDER ARTICLE III.
SECTION 1707-F. LIMITATIONS.
(A) AMOUNT.--THE TOTAL AGGREGATE AMOUNT OF ALL TAX CREDITS
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APPROVED FOR CONTRIBUTIONS FROM ELIGIBLE CONTRIBUTORS TO
SCHOLARSHIP GRANTING ORGANIZATIONS SHALL NOT EXCEED $705,000,000
IN THE 2027-2028 FISCAL YEAR AND EACH FISCAL YEAR THEREAFTER.
THE TOTAL AGGREGATE AMOUNT SHALL BE ALLOCATED AS FOLLOWS:
(1) NO LESS THAN $375,000,000 OF THE TOTAL AGGREGATE
AMOUNT SHALL BE USED TO PROVIDE TAX CREDITS FOR CONTRIBUTIONS
FROM ELIGIBLE CONTRIBUTORS TO SCHOLARSHIP GRANTING
ORGANIZATIONS FOR SCHOLARSHIP PROGRAMS.
(2) NO LESS THAN $74,500,000 OF THE TOTAL AGGREGATE
AMOUNT SHALL BE USED TO PROVIDE TAX CREDITS FOR CONTRIBUTIONS
FROM ELIGIBLE CONTRIBUTORS TO SCHOLARSHIP GRANTING
ORGANIZATIONS FOR EDUCATIONAL IMPROVEMENT PROGRAMS.
(3) NO LESS THAN $30,500,000 OF THE TOTAL AGGREGATE
AMOUNT SHALL BE USED TO PROVIDE TAX CREDITS FOR CONTRIBUTIONS
FROM ELIGIBLE CONTRIBUTORS TO SCHOLARSHIP GRANTING
ORGANIZATIONS FOR EARLY CHILDHOOD SCHOLARSHIP PROGRAMS.
(4) NO LESS THAN $225,000,000 OF THE TOTAL AGGREGATE
AMOUNT SHALL BE USED TO PROVIDE TAX CREDITS FOR CONTRIBUTIONS
FROM ELIGIBLE CONTRIBUTORS TO SCHOLARSHIP GRANTING
ORGANIZATIONS FOR ECONOMICALLY DISADVANTAGED SCHOLARSHIP
PROGRAMS.
(B) ACTIVITIES.--NO TAX CREDIT MAY BE APPROVED FOR
ACTIVITIES THAT ARE A PART OF AN ELIGIBLE CONTRIBUTOR'S NORMAL
COURSE OF BUSINESS.
(C) TAX LIABILITY.--
(1) EXCEPT AS PROVIDED IN PARAGRAPH (2), A TAX CREDIT
GRANTED FOR A TAX YEAR MAY NOT EXCEED THE TAX LIABILITY OF AN
ELIGIBLE CONTRIBUTOR.
(2) IN THE CASE OF A CREDIT GRANTED TO A PASS-THROUGH
ENTITY WHICH ELECTS TO DISTRIBUTE THE CREDIT UNDER SECTION
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1706-F(C), A TAX CREDIT GRANTED FOR A TAX YEAR AND
DISTRIBUTED TO A SHAREHOLDER, MEMBER OR PARTNER MAY NOT
EXCEED THE TAX LIABILITY OF THE SHAREHOLDER, MEMBER OR
PARTNER.
(D) TAX CREDIT USE.--A TAX CREDIT NOT USED BY AN ELIGIBLE
CONTRIBUTOR IN THE TAX YEAR THE CONTRIBUTION WAS MADE OR IN THE
TAX YEAR DESIGNATED UNDER SECTION 1706-F(C) MAY NOT BE CARRIED
FORWARD OR CARRIED BACK AND IS NOT REFUNDABLE OR TRANSFERABLE.
SECTION 1708-F. SCHOLARSHIPS.
(A) NONTAXABLE INCOME.--A RECIPIENT'S SCHOLARSHIP SHALL NOT
BE CONSIDERED TAXABLE INCOME FOR PURPOSES OF ARTICLE III.
(B) FINANCIAL ASSISTANCE.--A RECIPIENT'S SCHOLARSHIP SHALL
NOT CONSTITUTE AN APPROPRIATION OR FINANCIAL ASSISTANCE TO THE
SCHOOL OR EARLY CHILDHOOD PROGRAM ATTENDED BY THE RECIPIENT.
(C) AMOUNT.--THE COMBINED AMOUNT OF THE SCHOLARSHIP AWARDED
TO A RECIPIENT AND ADDITIONAL FINANCIAL ASSISTANCE PROVIDED TO
THE RECIPIENT MAY NOT EXCEED THE TUITION RATE AND SCHOOL-RELATED
FEES FOR THE PARTICIPATING PUBLIC SCHOOL OR PARTICIPATING
NONPUBLIC SCHOOL THAT THE RECIPIENT ATTENDS OR WILL ATTEND.
SECTION 1709-F. EDUCATIONAL IMPROVEMENT PROGRAMS.
A SCHOLARSHIP GRANTING ORGANIZATION MAY PROVIDE FUNDS TO AN
EDUCATIONAL IMPROVEMENT PROGRAM THAT MEETS THE REQUIREMENTS
ESTABLISHED BY THE DEPARTMENT IN CONSULTATION WITH THE
DEPARTMENT OF EDUCATION.
SECTION 1710-F. LOW-ACHIEVING SCHOOLS.
(A) LIST.--BY FEBRUARY 1 OF EACH YEAR, THE DEPARTMENT OF
EDUCATION SHALL PUBLISH ON THE DEPARTMENT OF EDUCATION'S
PUBLICLY ACCESSIBLE INTERNET WEBSITE A LIST OF THE LOW-ACHIEVING
SCHOOLS FOR THE FOLLOWING SCHOOL YEAR.
(B) NOTICE.--BY FEBRUARY 1 OF EACH YEAR, THE DEPARTMENT OF
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EDUCATION SHALL NOTIFY EACH SCHOOL DISTRICT IDENTIFIED AS HAVING
AT LEAST ONE LOW-ACHIEVING SCHOOL AND SHALL FURNISH THE SCHOOL
DISTRICT WITH A LIST OF THE LOW-ACHIEVING SCHOOLS LOCATED WITHIN
THE SCHOOL DISTRICT.
(C) AVERAGE DAILY MEMBERSHIP.--
(1) A RECIPIENT WHO WAS ENROLLED IN THE RECIPIENT'S
SCHOOL DISTRICT OF RESIDENCE OR IN A CHARTER SCHOOL, REGIONAL
CHARTER SCHOOL OR CYBER CHARTER SCHOOL WHEN THE RECIPIENT
FIRST RECEIVED A SCHOLARSHIP UNDER AN ECONOMICALLY
DISADVANTAGED SCHOLARSHIP PROGRAM SHALL CONTINUE TO BE
COUNTED IN THE AVERAGE DAILY MEMBERSHIP OF THE SCHOOL
DISTRICT FOR ONE YEAR AFTER ENROLLING IN A PARTICIPATING
PUBLIC SCHOOL OR PARTICIPATING NONPUBLIC SCHOOL.
(2) DURING THE YEAR REFERENCED IN PARAGRAPH (1) AND EACH
SCHOOL YEAR THEREAFTER, A SCHOOL DISTRICT OF A PARTICIPATING
PUBLIC SCHOOL IN WHICH THE RECIPIENT IS ENROLLED MAY NOT
INCLUDE THE RECIPIENT IN THE SCHOOL DISTRICT'S AVERAGE DAILY
MEMBERSHIP.
SECTION 1711-F. SCHOOL PARTICIPATION IN PROGRAM.
(A) NOTICE.--
(1) BY NOVEMBER 1 OF EACH YEAR, A SCHOOL DISTRICT WITH A
PUBLIC SCHOOL THAT WISHES TO BE A PARTICIPATING PUBLIC SCHOOL
FOR THE FOLLOWING FISCAL YEAR SHALL NOTIFY THE DEPARTMENT OF
EDUCATION. THE NOTIFICATION MUST INCLUDE ALL OF THE
FOLLOWING:
(I) EACH SCHOOL WITHIN THE SCHOOL DISTRICT THAT THE
SCHOOL DISTRICT INTENDS TO MAKE A PARTICIPATING PUBLIC
SCHOOL.
(II) THE AMOUNT OF TUITION AND SCHOOL-RELATED FEES
ATTRIBUTABLE TO EACH AVAILABLE SEAT. THE AMOUNT UNDER
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THIS SUBPARAGRAPH MAY NOT EXCEED THE AMOUNT CALCULATED
UNDER SECTION 2561 OF THE ACT OF MARCH 10, 1949 (P.L.30,
NO.14), KNOWN AS THE PUBLIC SCHOOL CODE OF 1949 .
(2) BY NOVEMBER 1 OF EACH YEAR, A NONPUBLIC SCHOOL THAT
WISHES TO BE A PARTICIPATING NONPUBLIC SCHOOL FOR THE
FOLLOWING FISCAL YEAR SHALL NOTIFY THE DEPARTMENT OF
EDUCATION AND SHALL SUBMIT TO THE DEPARTMENT OF EDUCATION, ON
A FORM DEVELOPED BY THE DEPARTMENT OF EDUCATION, ALL OF THE
FOLLOWING:
(I) THE AMOUNT OF TUITION AND SCHOOL-RELATED FEES
ATTRIBUTABLE TO EACH AVAILABLE SEAT FOR THE NONPUBLIC
SCHOOL FOR THE CURRENT SCHOOL YEAR.
(II) THE COMPLETE LIST OF APPLICATION AND ADMISSIONS
REQUIREMENTS USED BY THE NONPUBLIC SCHOOL TO DETERMINE
WHETHER A STUDENT IS ACCEPTED TO ENROLL IN THE NONPUBLIC
SCHOOL.
(III) THE NONPUBLIC SCHOOL'S INSTITUTIONAL FINANCIAL
AID POLICY.
(IV) THE NONPUBLIC SCHOOL'S POLICIES REGARDING THE
EXPULSION AND SUSPENSION OF PUPILS.
(V) THE NONPUBLIC SCHOOL'S TOTAL ENROLLMENT FOR THE
PREVIOUS SCHOOL YEAR.
(VI) THE NUMBER OF STUDENTS WHO APPLIED AND WERE NOT
ACCEPTED TO ENROLL IN THE NONPUBLIC SCHOOL IN THE
PREVIOUS SCHOOL YEAR.
(VII) THE NUMBER OF STUDENTS WHO WERE UNENROLLED
FROM THE NONPUBLIC SCHOOL AT THE INITIATION OF THE
NONPUBLIC SCHOOL IN THE PREVIOUS SCHOOL YEAR, NOT
INCLUDING STUDENTS WHO GRADUATED.
(B) LIST.--BY JANUARY 1 OF EACH YEAR, THE DEPARTMENT OF
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EDUCATION SHALL PUBLISH ON THE DEPARTMENT OF EDUCATION'S
PUBLICLY ACCESSIBLE INTERNET WEBSITE THE COMPLETE LIST OF
PARTICIPATING PUBLIC SCHOOLS AND PARTICIPATING NONPUBLIC SCHOOLS
THAT PROVIDED SATISFACTORY NOTICE AND INFORMATION REQUIRED UNDER
SUBSECTION (A). THE PUBLISHED LIST SHALL BE SUBJECT TO THE
FOLLOWING:
(1) AN ELIGIBLE STUDENT MAY NOT RECEIVE A SCHOLARSHIP TO
ATTEND A SCHOOL THAT IS NOT ON THE LIST.
(2) THE LIST SHALL INCLUDE THE INFORMATION PROVIDED BY
EACH PUBLIC SCHOOL UNDER SUBSECTION (A)(1).
(3) THE LIST SHALL INCLUDE THE INFORMATION PROVIDED BY
EACH NONPUBLIC SCHOOL UNDER SUBSECTION (A)(2).
(4) THE LIST MAY NOT INCLUDE A NONPUBLIC SCHOOL THAT
DISCRIMINATES ON A BASIS THAT IS ILLEGAL UNDER TITLE VI OF
THE CIVIL RIGHTS ACT OF 1964 (PUBLIC LAW 88-352, 42 U.S.C. §
2000 ET SEQ.).
(C) PARTICIPATING PUBLIC SCHOOL CRITERIA.--THE FOLLOWING
CRITERIA SHALL APPLY TO A PARTICIPATING PUBLIC SCHOOL:
(1) EXCEPT AS OTHERWISE PROVIDED IN THIS ARTICLE, A
SCHOOL DISTRICT SHALL ENROLL STUDENTS IN A PARTICIPATING
PUBLIC SCHOOL ON A LOTTERY BASIS FROM A POOL OF RECIPIENTS
WHO MEET THE APPLICATION DEADLINE SET BY THE DEPARTMENT OF
EDUCATION UNTIL THE PARTICIPATING PUBLIC SCHOOL FILLS THE
SCHOOL'S AVAILABLE SEATS. THE POOL MAY NOT INCLUDE A
RECIPIENT WHO:
(I) HAS BEEN EXPELLED OR IS IN THE PROCESS OF BEING
EXPELLED UNDER SECTION 1317.2, 1318 OR 1318.1 OF THE
PUBLIC SCHOOL CODE OF 1949 AND APPLICABLE REGULATIONS OF
THE STATE BOARD OF EDUCATION.
(II) HAS BEEN RECRUITED BY THE SCHOOL DISTRICT OR
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ITS REPRESENTATIVES FOR ATHLETIC PURPOSES.
(2) ENROLLMENT OF RECIPIENTS MAY NOT PLACE THE SCHOOL
DISTRICT IN VIOLATION OF A VALID AND BINDING DESEGREGATION
ORDER.
(3) PRIORITY SHALL BE GIVEN TO:
(I) AN EXISTING RECIPIENT.
(II) A RECIPIENT WHO IS A SIBLING OF A STUDENT
CURRENTLY ENROLLED IN THE SCHOOL DISTRICT.
(D) PARTICIPATING NONPUBLIC SCHOOL CRITERIA.--THE FOLLOWING
CRITERIA SHALL APPLY TO A PARTICIPATING NONPUBLIC SCHOOL:
(1) THE PARTICIPATING NONPUBLIC SCHOOL MAY NOT
DISCRIMINATE ON A BASIS WHICH IS ILLEGAL UNDER FEDERAL OR
STATE LAWS APPLICABLE TO NONPUBLIC SCHOOLS.
(2) THE PARTICIPATING NONPUBLIC SCHOOL SHALL COMPLY WITH
SECTION 1521 OF THE PUBLIC SCHOOL CODE OF 1949.
(3) THE PARTICIPATING NONPUBLIC SCHOOL OR ITS
REPRESENTATIVES MAY NOT RECRUIT A STUDENT FOR ATHLETIC
PURPOSES.
(E) STUDENT RULES, POLICIES AND PROCEDURES.--
(1) PRIOR TO ENROLLMENT OF A RECIPIENT, A SCHOOL
DISTRICT OF A PARTICIPATING PUBLIC SCHOOL OR A PARTICIPATING
NONPUBLIC SCHOOL SHALL INFORM THE RECIPIENT'S PARENT OF THE
RULES, POLICIES AND PROCEDURES OF THE PARTICIPATING PUBLIC
SCHOOL OR PARTICIPATING NONPUBLIC SCHOOL, INCLUDING ACADEMIC
POLICIES, DISCIPLINARY RULES AND ADMINISTRATIVE PROCEDURES OF
THE PARTICIPATING PUBLIC SCHOOL OR PARTICIPATING NONPUBLIC
SCHOOL.
(2) ENROLLMENT OF A RECIPIENT IN A PARTICIPATING PUBLIC
SCHOOL OR PARTICIPATING NONPUBLIC SCHOOL SHALL CONSTITUTE
ACCEPTANCE OF THE RULES, POLICIES AND PROCEDURES OF THE
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PARTICIPATING PUBLIC SCHOOL OR PARTICIPATING NONPUBLIC
SCHOOL.
(F) TRANSPORTATION.--
(1) TRANSPORTATION OF RECIPIENTS SHALL BE PROVIDED TO
THE EXTENT REQUIRED UNDER SECTION 1361 OF THE PUBLIC SCHOOL
CODE OF 1949.
(2) REIMBURSEMENT SHALL BE AS FOLLOWS:
(I) TRANSPORTATION OF A RECIPIENT ATTENDING A
PARTICIPATING PUBLIC SCHOOL SHALL BE SUBJECT TO
REIMBURSEMENT UNDER SECTION 2541 OF THE PUBLIC SCHOOL
CODE OF 1949.
(II) TRANSPORTATION OF A RECIPIENT ATTENDING A
PARTICIPATING NONPUBLIC SCHOOL SHALL BE SUBJECT TO
REIMBURSEMENT UNDER SECTIONS 2509.3 AND 2541 OF THE
PUBLIC SCHOOL CODE OF 1949.
(G) INSTITUTIONAL FINANCIAL AID.--A PARTICIPATING NONPUBLIC
SCHOOL MAY NOT USE A RECIPIENT'S SCHOLARSHIP AWARD TO REDUCE OR
SUPPLANT THE AMOUNT OF INSTITUTIONAL FINANCIAL AID PROVIDED BY
THE PARTICIPATING NONPUBLIC SCHOOL, EXCEPT IF THE RECIPIENT'S
SCHOLARSHIP AWARD EXCEEDS THE RECIPIENT'S TOTAL COST OF TUITION
AND SCHOOL-RELATED FEES.
(H) TUITION RATES.--
(1) A SCHOOL DISTRICT OF A PARTICIPATING PUBLIC SCHOOL
MAY NOT CHARGE A RECIPIENT A HIGHER TUITION RATE OR SCHOOL-
RELATED FEE THAN THE SCHOOL DISTRICT WOULD HAVE CHARGED TO A
SIMILARLY SITUATED STUDENT WHO IS NOT RECEIVING A
SCHOLARSHIP.
(2) NOTWITHSTANDING SECTION 2561 OF THE PUBLIC SCHOOL
CODE OF 1949, A SCHOOL DISTRICT OF A PARTICIPATING PUBLIC
SCHOOL MAY CHARGE A RECIPIENT A TUITION RATE THAT IS LOWER
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THAN THAT CHARGED TO A STUDENT WHO IS NOT RECEIVING A
SCHOLARSHIP.
(3) A PARTICIPATING NONPUBLIC SCHOOL MAY NOT CHARGE A
RECIPIENT A HIGHER TUITION RATE OR SCHOOL-RELATED FEE THAN
THE PARTICIPATING NONPUBLIC SCHOOL WOULD HAVE CHARGED TO A
SIMILARLY SITUATED STUDENT WHO IS NOT RECEIVING A
SCHOLARSHIP.
(I) CONSTRUCTION.--NOTHING IN THIS ARTICLE SHALL BE
CONSTRUED TO:
(1) PROHIBIT A PARTICIPATING NONPUBLIC SCHOOL FROM
LIMITING ADMISSION TO A PARTICULAR GRADE LEVEL, A SINGLE
GENDER OR AREAS OF CONCENTRATION OF THE PARTICIPATING
NONPUBLIC SCHOOL, INCLUDING MATHEMATICS, SCIENCE AND THE
ARTS.
(2) AUTHORIZE THE COMMONWEALTH OR AN AGENCY, OFFICER OR
POLITICAL SUBDIVISION OF THE COMMONWEALTH TO IMPOSE AN
ADDITIONAL REQUIREMENT ON A PARTICIPATING NONPUBLIC SCHOOL
THAT IS NOT OTHERWISE AUTHORIZED UNDER THIS ARTICLE OR OTHER
LAWS OF THIS COMMONWEALTH OR TO REQUIRE A PARTICIPATING
NONPUBLIC SCHOOL TO ENROLL A RECIPIENT IF THE PARTICIPATING
NONPUBLIC SCHOOL DOES NOT OFFER APPROPRIATE PROGRAMS, IS NOT
STRUCTURED OR EQUIPPED WITH THE NECESSARY FACILITIES TO MEET
THE RECIPIENT'S SPECIAL NEEDS OR DOES NOT OFFER A PARTICULAR
PROGRAM REQUESTED.
SECTION 1712-F. ORIGINAL JURISDICTION.
THE PENNSYLVANIA SUPREME COURT SHALL HAVE EXCLUSIVE AND
ORIGINAL JURISDICTION TO HEAR A CHALLENGE OR TO RENDER A
DECLARATORY JUDGMENT CONCERNING THE CONSTITUTIONALITY OF THIS
ARTICLE. THE PENNSYLVANIA SUPREME COURT MAY TAKE AN ACTION THE
COURT DEEMS APPROPRIATE, CONSISTENT WITH THE PENNSYLVANIA
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SUPREME COURT'S RETAINING JURISDICTION OVER THE MATTER, TO FIND
FACTS OR TO EXPEDITE A FINAL JUDGMENT IN CONNECTION WITH A
CHALLENGE OR REQUEST FOR DECLARATORY RELIEF.
SECTION 1713-F. REPORTING.
(A) PROGRAMS PROVIDING SCHOLARSHIPS .-- EACH SCHOLARSHIP
GRANTING ORGANIZATION THAT OPERATES A SCHOLARSHIP PROGRAM,
ECONOMICALLY DISADVANTAGED SCHOLARSHIP PROGRAM OR EARLY
CHILDHOOD SCHOLARSHIP PROGRAM SHALL ANNUALLY REPORT TO THE
DEPARTMENT, BY SCHOLARSHIP PROGRAM, ECONOMICALLY DISADVANTAGED
SCHOLARSHIP PROGRAM AND EARLY CHILDHOOD SCHOLARSHIP PROGRAM, ALL
OF THE FOLLOWING INFORMATION BASED ON THE IMMEDIATELY PRECEDING
FISCAL YEAR BY OCTOBER 1 OF EACH YEAR:
(1) THE NUMBER OF SCHOLARSHIPS AWARDED TO APPLICANTS
WITH A HOUSEHOLD INCOME THAT DOES NOT EXCEED 50% OF THE
MAXIMUM ANNUAL HOUSEHOLD INCOME, DISAGGREGATED BY PROGRAM
CATEGORY.
(2) THE NUMBER OF SCHOLARSHIPS AWARDED TO APPLICANTS
WITH A HOUSEHOLD INCOME THAT IS GREATER THAN 50% BUT DOES NOT
EXCEED 75% OF THE MAXIMUM ANNUAL HOUSEHOLD INCOME,
DISAGGREGATED BY PROGRAM CATEGORY.
(3) THE NUMBER OF SCHOLARSHIPS AWARDED TO APPLICANTS
WITH A HOUSEHOLD INCOME THAT IS GREATER THAN 75% BUT DOES NOT
EXCEED 100% OF THE MAXIMUM ANNUAL HOUSEHOLD INCOME,
DISAGGREGATED BY PROGRAM CATEGORY.
(4) THE TOTAL AMOUNT OF CONTRIBUTIONS RECEIVED FROM
ELIGIBLE CONTRIBUTORS GRANTED A TAX CREDIT UNDER THIS ARTICLE
DURING THE IMMEDIATELY PRECEDING FISCAL YEAR.
(5) FOR EACH SCHOLARSHIP AWARDED TO AN APPLICANT:
(I) AN INDICATOR OF WHETHER THE RECIPIENT WAS AN
ELIGIBLE EARLY CHILDHOOD STUDENT, ELIGIBLE STUDENT OR
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ELIGIBLE STUDENT WITH A DISABILITY.
(II) AN INDICATOR OF WHETHER THE RECIPIENT WAS IN AN
EARLY CHILDHOOD PROGRAM, IN GRADES KINDERGARTEN THROUGH 8
OR IN GRADES 9 THROUGH 12.
(III) THE DOLLAR AMOUNT OF THE SCHOLARSHIP AWARD.
(IV) THE DOLLAR AMOUNT OF TUITION AND SCHOOL-RELATED
FEES PAID BY THE STUDENT AFTER THE SCHOLARSHIP AWARD WAS
APPLIED.
(V) THE YEAR IN WHICH THE SCHOLARSHIP AWARD WAS
USED.
(VI) THE NAME OF THE RECIPIENT'S SCHOOL DISTRICT OF
RESIDENCE.
(VII) THE NAME OF THE SCHOOL OR EARLY CHILDHOOD
PROGRAM THAT THE RECIPIENT ATTENDED.
(B) EDUCATIONAL IMPROVEMENT PROGRAMS.--EACH SCHOLARSHIP
GRANTING ORGANIZATION THAT OPERATES AN EDUCATIONAL IMPROVEMENT
PROGRAM SHALL ANNUALLY REPORT THE FOLLOWING INFORMATION BASED ON
THE IMMEDIATELY PRECEDING FISCAL YEAR TO THE DEPARTMENT BY
OCTOBER 1 OF EACH YEAR:
(1) THE TOTAL AMOUNT OF CONTRIBUTIONS RECEIVED FROM
ELIGIBLE CONTRIBUTORS GRANTED A TAX CREDIT UNDER THIS ARTICLE
DURING THE IMMEDIATELY PRECEDING FISCAL YEAR.
(2) A DESCRIPTION OF EACH EDUCATIONAL IMPROVEMENT
PROGRAM SUPPORTED BY THE SCHOLARSHIP GRANTING ORGANIZATION.
(3) THE AMOUNT DISTRIBUTED TO EACH EDUCATIONAL
IMPROVEMENT PROGRAM SUPPORTED BY THE SCHOLARSHIP GRANTING
ORGANIZATION.
(C) SCHOLARSHIP GRANTING ORGANIZATIONS.--EACH SCHOLARSHIP
GRANTING ORGANIZATION SHALL ANNUALLY REPORT TO THE DEPARTMENT,
BASED ON THE IMMEDIATELY PRECEDING FISCAL YEAR, THE USE OF
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CONTRIBUTIONS NOT USED TO FUND SCHOLARSHIPS OR EDUCATIONAL
IMPROVEMENT PROGRAMS, DISAGGREGATED BY ELIGIBLE USE UNDER
SECTION 1704-F(B). THE DEPARTMENT MAY REQUEST SUPPORTING
DOCUMENTATION.
(D) FORMS.--THE INFORMATION REQUIRED UNDER SUBSECTIONS (A),
(B) AND (C) SHALL BE SUBMITTED ON A FORM PROVIDED BY THE
DEPARTMENT. NO LATER THAN AUGUST 1 OF EACH YEAR, THE DEPARTMENT
SHALL DISTRIBUTE THE FORMS TO EACH SCHOLARSHIP GRANTING
ORGANIZATION REQUIRED TO MAKE A REPORT UNDER THIS SECTION.
(E) PUBLICATION.--BEGINNING NOVEMBER 1, 2028, AND EACH YEAR
THEREAFTER, THE DEPARTMENT SHALL ANNUALLY PUBLISH A DOWNLOADABLE
SPREADSHEET ON THE DEPARTMENT'S PUBLICLY ACCESSIBLE INTERNET
WEBSITE CONTAINING THE INFORMATION REQUIRED UNDER SUBSECTIONS
(A), (B) AND (C). TO PROTECT STUDENT PRIVACY AND PREVENT THE
IDENTIFICATION OF STUDENTS, THE DEPARTMENT MAY NOT DISCLOSE THE
NAMES OF SCHOLARSHIP AWARD RECIPIENTS.
SECTION 14.1. SECTION 1828-G(C) OF THE ACT IS AMENDED TO
READ:
SECTION 1828-G. BUSINESS FIRMS.
* * *
(C) LIMITATION.--THE DEPARTMENT MAY NOT APPROVE MORE THAN
[$30,000,000] $60,000,000 IN CREDIT-ELIGIBLE CAPITAL
CONTRIBUTIONS UNDER THIS PART.
SECTION 14.2. SECTION 1829-G(A)(3) AND (B)(3) OF THE ACT ARE
AMENDED AND SUBSECTION (A) IS AMENDED BY ADDING A PARAGRAPH TO
READ:
SECTION 1829-G. TAX CREDIT CERTIFICATES.
(A) APPLICATION.--
* * *
(3) [THE] WITH RESPECT TO PROGRAM ONE TAX CREDIT
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AUTHORITY, THE APPLICATION SHALL BE FILED NO LATER THAN
FEBRUARY 1 FOR CREDIT-ELIGIBLE CAPITAL CONTRIBUTIONS MADE IN
THE PRECEDING CALENDAR YEAR.
(4) WITH RESPECT TO PROGRAM TWO TAX CREDIT AUTHORITY,
THE APPLICATION SHALL BE FILED NO LATER THAN FEBRUARY 1 FOR
CREDIT-ELIGIBLE CAPITAL CONTRIBUTIONS MADE IN THE PRECEDING
CALENDAR YEAR.
(B) REVIEW, RECOMMENDATION AND APPROVAL.--
* * *
(3) IN AWARDING TAX CREDIT CERTIFICATES UNDER THIS PART,
THE DEPARTMENT:
(I) BEGINNING WITH FISCAL YEAR 2020-2021, MAY NOT
AWARD TAX CREDIT CERTIFICATES THAT WOULD RESULT IN THE
UTILIZATION OF MORE THAN [$6,000,000] $12,000,000 IN TAX
CREDITS IN ANY FISCAL YEAR, EXCEPT FOR TAX CREDITS
CARRIED FORWARD.
(II) MAY NOT AWARD MORE THAN [$30,000,000]
$60,000,000 IN TAX CREDIT CERTIFICATES, IN THE AGGREGATE,
UNDER THIS PART.
SECTION 14.3. THE ACT IS AMENDED BY ADDING ARTICLES TO READ:
ARTICLE XXII
RETURN ON EQUITY
SECTION 2201. DEFINITIONS.
THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ARTICLE
SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
CONTEXT CLEARLY INDICATES OTHERWISE:
"10-YEAR TREASURY." THE MARKET YIELD ON UNITED STATES
TREASURY SECURITIES AT 10-YEAR CONSTANT MATURITY, QUOTED ON AN
INVESTMENT BASIS, AS REPORTED BY THE FEDERAL RESERVE SYSTEM.
"AUCTION-CLEARING RETURN." THE UNIFORM RATE OF RETURN
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ESTABLISHED AS THE CLEARING PRICE IN A COMPETITIVE EQUITY
AUCTION CONDUCTED UNDER SECTION 2203(E).
"AUCTION EQUITY INTEREST." THE FOLLOWING:
(1) AN ECONOMIC INTEREST ISSUED UNDER A COMPETITIVE
EQUITY AUCTION UNDER SECTION 2203. AN AUCTION EQUITY INTEREST
REPRESENTS PARTICIPATION IN THE FINANCIAL PERFORMANCE OF A
SPECIFIC REGULATED SERVICE, WHICH CARRIES THE AUCTION-
CLEARING RETURN AS ADJUSTED UNDER SECTION 2203(C), AND IS
DISTINCT FROM THE COVERED UTILITY'S BASE COMMON STOCK. THE
FOLLOWING SHALL APPLY TO AN AUCTION EQUITY INTEREST:
(I) THE AUTHORIZED RETURN AND FINANCIAL PERFORMANCE
OF AN AUCTION EQUITY INTEREST SHALL BE DETERMINED SOLELY
BY REFERENCE TO THE REGULATED SERVICE TO WHICH IT RELATES
AND SHALL NOT BE AFFECTED BY THE FINANCIAL PERFORMANCE
OF, OR RETURNS APPLICABLE TO, ANY OTHER REGULATED SERVICE
OR ANY ACTIVITY OF THE COVERED UTILITY NOT SUBJECT TO THE
JURISDICTION OF THE COMMISSION.
(II) EXCEPT IF AUCTION EQUITY INTERESTS ARE ISSUED
BY A REGULATED SERVICE CORPORATION ESTABLISHED UNDER
SECTION 2203(L), AUCTION EQUITY INTERESTS ISSUED DIRECTLY
BY THE COVERED UTILITY ARE OBLIGATIONS OF THE COVERED
UTILITY AND MAY BE SUBJECT TO ALL RISKS APPLICABLE TO THE
COVERED UTILITY GENERALLY, INCLUDING THE RISK OF
INSOLVENCY OR BANKRUPTCY OF THE COVERED UTILITY.
(III) IF THE COVERED UTILITY HAS ESTABLISHED A
REGULATED SERVICE CORPORATION AND REGULATED SERVICE LLC
UNDER SECTION 2203, AUCTION EQUITY INTERESTS SHALL BE
ISSUED BY THE REGULATED SERVICE CORPORATION RATHER THAN
BY THE COVERED UTILITY ITSELF.
(2) AS USED IN THIS DEFINITION, THE TERM "COVERED
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UTILITY'S BASE COMMON STOCK" SHALL MEAN THE STOCK OF THE
REGULATED SERVICE CORPORATION RETAINED BY THE COVERED
UTILITY.
"AUTHORIZED RETURN ON EQUITY." THE RATE OF RETURN ON COMMON
EQUITY AUTHORIZED BY THE COMMISSION FOR RATEMAKING PURPOSES.
"COMMISSION." THE PENNSYLVANIA PUBLIC UTILITY COMMISSION.
"COMPETITIVE EQUITY AUCTION." A PROCESS OVERSEEN BY THE
COMMISSION IN ACCORDANCE WITH THIS ARTICLE THAT PROVIDES A
MARKET-BASED DETERMINATION OF THE COST OF EQUITY FOR A COVERED
UTILITY.
"COST OF EQUITY." THE MINIMUM RATE OF RETURN NECESSARY TO
ATTRACT EQUITY CAPITAL TO INVEST IN A SPECIFIC REGULATED
SERVICE.
"COVERED UTILITY." AN INVESTOR-OWNED ELECTRIC DISTRIBUTION
COMPANY, NATURAL GAS DISTRIBUTION COMPANY OR WATER OR WASTEWATER
PUBLIC UTILITIES REGULATED BY THE COMMISSION.
"DEFAULT AUTHORIZED RETURN." THE AUTHORIZED RETURN ON EQUITY
DETERMINED UNDER SECTION 2202.
"RATE PERIOD." THE TIME PERIOD IN WHICH A COVERED UTILITY
COLLECTS RATES THAT ARE AUTHORIZED AND APPROVED BY THE
COMMISSION.
"REGULATED SERVICE." A SERVICE PROVIDED BY A COVERED UTILITY
FOR WHICH THE COMMISSION DETERMINES AN AUTHORIZED RETURN ON
EQUITY. IF A COVERED UTILITY PROVIDES MORE THAN ONE CATEGORY OF
SERVICE SUBJECT TO THE JURISDICTION OF THE COMMISSION, EACH
CATEGORY SHALL BE TREATED AS A SEPARATE REGULATED SERVICE FOR
PURPOSES OF THIS ARTICLE AND CONSISTENT WITH THE PROPERTY
SEGREGATION REQUIREMENTS OF 66 PA.C.S. § 1305 (RELATING TO
ADVANCE PAYMENT OF RATES; INTEREST ON DEPOSITS), UNLESS THE
COMMISSION DETERMINES THAT CONSOLIDATED TREATMENT IS
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APPROPRIATE.
"REGULATED SERVICE CORPORATION." A CORPORATION ORGANIZED
UNDER THE LAWS OF ANY STATE, FORMED OR DESIGNATED BY A COVERED
UTILITY UNDER SECTION 2203(L) THAT:
(1) IS TREATED AS A CORPORATION FOR FEDERAL INCOME TAX
PURPOSES.
(2) CONDUCTS NO ACTIVITIES OTHER THAN HOLDING A
MEMBERSHIP INTEREST IN A REGULATED SERVICE LLC AND SERVING AS
THE ISSUER OF AUCTION EQUITY INTERESTS FOR THE REGULATED
SERVICE ASSOCIATED WITH THAT REGULATED SERVICE LLC.
"REGULATED SERVICE LLC." A LIMITED LIABILITY COMPANY THAT IS
A WHOLLY OWNED SUBSIDIARY OF A REGULATED SERVICE CORPORATION,
FORMED OR DESIGNATED UNDER SECTION 2203(L), TO HOLD ASSETS,
RIGHTS, FRANCHISES AND OBLIGATIONS ASSOCIATED WITH A REGULATED
SERVICE. A REGULATED SERVICE LLC SHALL BE TREATED AS A
DISREGARDED ENTITY FOR FEDERAL INCOME TAX PURPOSES.
SECTION 2202. DEFAULT AUTHORIZED RETURN ON EQUITY.
(A) DEFAULT AUTHORIZED RETURN.--UNLESS AN AUTHORIZED RETURN
ON EQUITY IS ESTABLISHED UNDER SECTION 2203, THE COMMISSION
SHALL SET THE AUTHORIZED RETURN ON A COVERED UTILITY'S COMMON
EQUITY EQUAL TO THE SUM OF THE 10-YEAR TREASURY AND 2%.
(B) ANNUAL RESET.--THE DEFAULT AUTHORIZED RETURN SHALL BE
RESET ANNUALLY AS OF JANUARY 1 OF EACH YEAR TO REFLECT THE
AVERAGE OF THE 10-YEAR TREASURY RATE ON THE 60 BUSINESS DAYS
IMMEDIATELY PRIOR TO JANUARY 1 OF THAT YEAR.
(C) ALTERNATIVE BENCHMARK.--IF PUBLICATION OF THE 10-YEAR
TREASURY IS CEASED OR INTERRUPTED, THE COMMISSION SHALL IDENTIFY
AND USE FOR THE CALCULATION THE ALTERNATIVE BENCHMARK THE
COMMISSION DETERMINES TO BE THE BEST SUBSTITUTE FOR CARRYING OUT
THE PURPOSES OF THIS SECTION.
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(D) BURDEN OF PROOF.--THE BURDEN OF DEMONSTRATING THAT THE
DEFAULT AUTHORIZED RETURN ON EQUITY IS INSUFFICIENT TO ATTRACT
CAPITAL SHALL BE EXCLUSIVELY WITH THE COVERED UTILITY. THE
DEFAULT AUTHORIZED RETURN SHALL BE PRESUMED JUST AND REASONABLE
UNLESS REBUTTED THROUGH THE COMPETITIVE EQUITY AUCTION PROCESS
SPECIFIED IN SECTION 2203.
(E) INITIAL RATE PERIOD.--FOR A RATE PERIOD COMMENCING
BETWEEN THE EFFECTIVE DATE OF THIS SUBSECTION AND THE FIRST
RESET DATE UNDER SUBSECTION (B), THE 10-YEAR TREASURY COMPONENT
SHALL BE DETERMINED USING THE AVERAGING METHODOLOGY PRESCRIBED
IN SUBSECTION (B) AND APPLIED TO THE 60 BUSINESS DAYS
IMMEDIATELY PRECEDING THE EFFECTIVE DATE OF THIS SUBSECTION.
(F) RATE ADJUSTMENT.--
(1) IF THE AUTHORIZED RETURN ON EQUITY FOR A REGULATED
SERVICE CHANGES UNDER THIS SECTION OR SECTION 2203, THE
COMMISSION SHALL ADJUST THE RATES APPLICABLE TO THE REGULATED
SERVICE TO REFLECT THE NEW AUTHORIZED RETURN ON EQUITY.
(2) THE ADJUSTMENT SHALL BE IMPLEMENTED THROUGH THE
MECHANISM THE COMMISSION DETERMINES TO BE MOST EXPEDIENT,
WHICH MAY INCLUDE A SURCHARGE OR CREDIT APPLIED TO EXISTING
TARIFFS, AN AUTOMATIC RATE ADJUSTMENT MECHANISM OR
INCORPORATION INTO THE COVERED UTILITY'S NEXT GENERAL RATE
PROCEEDING.
(3) THE COMMISSION SHALL IMPLEMENT AN ADJUSTMENT NO
LATER THAN 90 DAYS AFTER THE CHANGE IN AUTHORIZED RETURN ON
EQUITY TAKES EFFECT.
(G) RISK INSURANCE.--NOTHING IN THIS ARTICLE SHALL PRECLUDE
A COVERED UTILITY FROM PROCURING THIRD-PARTY INSURANCE TO HEDGE
MATERIAL IDIOSYNCRATIC RISKS, WITH THE COST OF THE INSURANCE
RECOVERABLE IN RATES AS AN OPERATING EXPENSE SUBJECT TO THE
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COMMISSION'S DETERMINATION OF PRUDENCE.
(H) PERFORMANCE-BASED RATEMAKING.--
(1) NOTHING IN THIS ARTICLE SHALL PRECLUDE THE
COMMISSION FROM ESTABLISHING OR MAINTAINING A PERFORMANCE-
BASED RATEMAKING PLAN FOR A COVERED UTILITY IF A PLAN IS
DESIGNED FOR THE EXPECTED VALUE OF PERFORMANCE-BASED
ADJUSTMENTS TO THE AUTHORIZED RETURN ON EQUITY TO BE NEUTRAL.
(2) THE PERFORMANCE-BASED RATEMAKING PLAN MAY NOT PERMIT
THE AGGREGATE EFFECT OF PERFORMANCE-BASED ADJUSTMENTS TO
INCREASE THE COVERED UTILITY'S REALIZED RETURN ON EQUITY FOR
A REGULATED SERVICE BY MORE THAN TWO PERCENTAGE POINTS ABOVE
THE AUTHORIZED RETURN ON EQUITY FOR THAT REGULATED SERVICE AS
DETERMINED UNDER THIS ARTICLE.
(3) FOR PURPOSES OF THIS SUBSECTION, THE TERM
"PERFORMANCE-BASED RATEMAKING PLAN" MEANS A PLAN, MECHANISM
OR ORDER THAT ADJUSTS THE AUTHORIZED RETURN ON EQUITY OF A
COVERED UTILITY BASED ON MEASURED UTILITY PERFORMANCE AGAINST
SPECIFIED BENCHMARKS. THE TERM DOES NOT INCLUDE REVENUE
DECOUPLING MECHANISMS, FORMULA RATE PLANS OR OTHER MECHANISMS
THAT OPERATE ON REVENUE, COST RECOVERY OR RATE DESIGN WITHOUT
ADJUSTING THE AUTHORIZED RETURN ON EQUITY.
(I) INTERACTION WITH ALTERNATIVE RATEMAKING PLANS.--
(1) AN ALTERNATIVE RATEMAKING PLAN APPROVED BY THE
COMMISSION UNDER 66 PA.C.S. § 1330 (RELATING TO ALTERNATIVE
RATEMAKING FOR UTILITIES) WHICH IS IN EFFECT AS OF THE
EFFECTIVE DATE OF THIS PARAGRAPH SHALL REMAIN IN EFFECT IN
ACCORDANCE WITH THE PLAN'S TERMS, UNLESS A COMPONENT OF THE
PLAN THAT DETERMINES, ADJUSTS OR IS CALCULATED BY REFERENCE
TO THE AUTHORIZED RETURN ON EQUITY IS RECALCULATED USING THE
AUTHORIZED RETURN ON EQUITY UPON THE NEXT SCHEDULED
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ADJUSTMENT OR RESET OF THE COMPONENT, AS DETERMINED BY THE
COMMISSION UNDER THIS ARTICLE.
(2) NON-RETURN-ON-EQUITY COMPONENTS OF A PLAN, INCLUDING
DECOUPLING MECHANISMS, REVENUE-PER-CUSTOMER CAPS, PRICE CAP
MECHANISMS AND ANY DISTRIBUTION SYSTEM IMPROVEMENT CHARGE
APPROVED UNDER 66 PA.C.S. § 1353 (RELATING TO DISTRIBUTION
SYSTEM IMPROVEMENT CHARGE) WITHOUT LIMITATION, SHALL NOT BE
AFFECTED BY THIS ARTICLE.
(3) AN ALTERNATIVE RATEMAKING PLAN FILED WITH THE
COMMISSION UNDER 66 PA.C.S. § 1330 ON OR AFTER THE EFFECTIVE
DATE OF THIS PARAGRAPH SHALL INCORPORATE THE AUTHORIZED
RETURN ON EQUITY AS DETERMINED BY THE COMMISSION UNDER THIS
ARTICLE.
(4) THE COMMISSION MAY NOT APPROVE A PLAN THAT PERMITS A
RETURN ON EQUITY THAT IS GREATER THAN THE AUTHORIZED RETURN
ON EQUITY DETERMINED BY THE COMMISSION.
(5) NOTHING IN THIS SUBSECTION SHALL LIMIT THE AUTHORITY
OF THE COMMISSION TO APPROVE OR MAINTAIN A DISTRIBUTION
SYSTEM IMPROVEMENT CHARGE UNDER 66 PA.C.S. § 1353 IF THE
RETURN COMPONENT OF THE CHARGE IS CALCULATED USING THE
AUTHORIZED RETURN ON EQUITY DETERMINED BY THE COMMISSION
UNDER THIS ARTICLE.
(J) INITIAL IMPLEMENTATION.--
(1) NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE,
ACT OR PRIOR ORDER OF THE COMMISSION, THE DEFAULT AUTHORIZED
RETURN ON EQUITY ESTABLISHED UNDER THIS SECTION SHALL APPLY
TO EACH REGULATED SERVICE OF A COVERED UTILITY IMMEDIATELY
UPON THE EFFECTIVE DATE OF THIS PARAGRAPH, REGARDLESS OF
WHETHER A RATE PROCEEDING UNDER 66 PA.C.S § 1308(D) (RELATING
TO VOLUNTARY CHANGES IN RATES) IS PENDING AND WHEN A RATE
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PROCEEDING WAS LAST CONCLUDED.
(2) A RATE COMPONENT REFLECTING OR IMPLICITLY PERMITTING
AN AUTHORIZED RETURN ON EQUITY GREATER THAN THE DEFAULT
AUTHORIZED RETURN ESTABLISHED UNDER THIS SECTION MAY NO
LONGER BE CONSIDERED JUST AND REASONABLE AS OF THE EFFECTIVE
DATE OF THIS PARAGRAPH, EXCEPT TO THE EXTENT ESTABLISHED
THROUGH A COMPETITIVE EQUITY AUCTION CONDUCTED UNDER SECTION
2203. TO IMPLEMENT THIS SUBSECTION, THE COMMISSION SHALL:
(I) NO LATER THAN 60 DAYS AFTER THE EFFECTIVE DATE
OF THIS SUBPARAGRAPH, ISSUE AN ORDER FOR EACH COVERED
UTILITY SETTING THE AUTHORIZED RETURN ON EQUITY FOR EACH
OF ITS REGULATED SERVICES TO THE DEFAULT AUTHORIZED
RETURN DETERMINED UNDER SUBSECTION (A), AS ADJUSTED UNDER
SUBSECTION (E) FOR THE INITIAL RATE PERIOD.
(II) NO LATER THAN 120 DAYS AFTER THE EFFECTIVE DATE
OF THIS SUBPARAGRAPH, IMPLEMENT CORRESPONDING ADJUSTMENTS
TO CUSTOMER RATES, APPLYING THE MECHANISM THE COMMISSION
DETERMINES TO BE MOST EXPEDIENT UNDER SUBSECTION (F),
WHICH MAY INCLUDE A SURCHARGE OR CREDIT APPLIED TO
EXISTING TARIFFS OR AN AUTOMATIC RATE ADJUSTMENT
MECHANISM AND WHICH SHALL NOT REQUIRE THE INITIATION OF A
BASE RATE PROCEEDING UNDER 66 PA.C.S. § 1308(D).
(III) IMPLEMENT A TRUE-UP ADJUSTMENT FOR THE PERIOD
COMMENCING ON THE EFFECTIVE DATE OF THIS SUBPARAGRAPH AND
ENDING ON THE DATE ADJUSTED RATES TAKE EFFECT, CALCULATED
AS THE DIFFERENCE BETWEEN THE REVENUE ACTUALLY COLLECTED
BY THE COVERED UTILITY DURING THE PERIOD AND THE REVENUE
THAT WOULD HAVE BEEN COLLECTED DURING THE PERIOD HAD THE
DEFAULT AUTHORIZED RETURN BEEN REFLECTED IN RATES
THROUGHOUT, WITH INTEREST ACCRUING AT THE DEFAULT
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AUTHORIZED RETURN CALCULATED FROM THE MIDPOINT OF THE
PERIOD.
(3) A COVERED UTILITY THAT BELIEVES THE DEFAULT
AUTHORIZED RETURN IS INSUFFICIENT TO ATTRACT CAPITAL MAY, AT
ANY TIME FOLLOWING THE EFFECTIVE DATE OF THIS PARAGRAPH,
PETITION THE COMMISSION FOR A COMPETITIVE EQUITY AUCTION
UNDER SECTION 2203(A). THE PENDENCY OF A PETITION SHALL NOT
DELAY OR SUSPEND THE IMPLEMENTATION REQUIRED BY THIS
SUBSECTION.
(4) NOTHING UNDER THIS SUBSECTION SHALL BE CONSTRUED TO
DISTURB A NON-RETURN-ON-EQUITY COMPONENT OF A RATE CURRENTLY
IN EFFECT, INCLUDING THE AUTHORIZED CAPITAL STRUCTURE OR THE
COST OF DEBT, EXCEPT TO THE EXTENT THAT THE COMPONENTS MUST
BE ADJUSTED AS A MATHEMATICAL CONSEQUENCE OF THE CHANGE IN
AUTHORIZED RETURN ON EQUITY REQUIRED BY THIS SUBSECTION.
(K) RATE BASE.--
(1) FOR PURPOSES OF DETERMINING THE AUTHORIZED RETURN ON
EQUITY FOR A REGULATED SERVICE OF A COVERED UTILITY UNDER
THIS ARTICLE, WHETHER THE RETURN IS DETERMINED UNDER THIS
SECTION OR UNDER A COMPETITIVE EQUITY AUCTION UNDER SECTION
2203, THE COMMISSION SHALL DETERMINE A RATE BASE TO REFLECT
THE FULL VALUE OF ALL ASSETS PRUDENTLY INVESTED BY OR ON
BEHALF OF THE COVERED UTILITY FOR THE BENEFIT OF THE
REGULATED SERVICE, INCLUDING CONSTRUCTION WORK IN PROGRESS
AND NET OF ACCUMULATED DEPRECIATION.
(2) REDUCTIONS TO A RATE BASE SHALL SOLELY BE FOR
CAPITAL THAT IS NOT SUPPLIED BY INVESTORS, WHICH SHALL BE
LIMITED TO THE FOLLOWING:
(I) ACCUMULATED DEFERRED INCOME TAXES, TO THE EXTENT
THAT DEFERRED TAX LIABILITIES EXCEED DEFERRED TAX ASSETS.
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(II) CUSTOMER DEPOSITS.
(III) CUSTOMER ADVANCES FOR CONSTRUCTION.
(3) THE COMMISSION MAY NOT EXCLUDE FROM THE RATE BASE OF
A REGULATED SERVICE AN ASSET ON THE BASIS THAT THE ASSET HAS
NOT YET BEEN PLACED IN SERVICE IF THE INVESTMENT HAS BEEN
DETERMINED TO BE PRUDENT AND IS BEING UNDERTAKEN FOR THE
BENEFIT OF THE REGULATED SERVICE.
(4) THIS SUBSECTION SHALL BE IMPLEMENTED ON THE SAME
SCHEDULE AS THE INITIAL IMPLEMENTATION REQUIRED BY SUBSECTION
(J), AND THE COMMISSION'S 60-DAY ORDER AND 120-DAY RATE
ADJUSTMENT UNDER SUBSECTION (J) SHALL REFLECT BOTH THE CHANGE
IN AUTHORIZED RETURN ON EQUITY AND THE RATE BASE DETERMINED
IN ACCORDANCE WITH THIS SUBSECTION.
SECTION 2203. COMPETITIVE EQUITY AUCTION.
(A) UTILITY-INITIATED AUCTION.--
(1) IF A COVERED UTILITY BELIEVES THAT ITS COST OF
EQUITY EXCEEDS THE DEFAULT AUTHORIZED RETURN, THE COVERED
UTILITY MAY PETITION THE COMMISSION TO OVERSEE A COMPETITIVE
EQUITY AUCTION.
(2) IF THE COVERED UTILITY FAILS TO TAKE ALL NECESSARY
STEPS TO FACILITATE THE COMPETITIVE EQUITY AUCTION BASED ON
THE TIMELINE AND PROCEDURES DETERMINED BY THE COMMISSION, THE
PETITION SHALL BE DEEMED WITHDRAWN AND THE COVERED UTILITY IS
DEEMED TO HAVE ACCEPTED THE DEFAULT AUTHORIZED RETURN.
(3) A PETITION UNDER PARAGRAPH (1) SHALL BE FILED NO
LATER THAN 30 DAYS AFTER THE EFFECTIVE DATE OF THIS PARAGRAPH
OR THE MOST RECENT RESET OF THE DEFAULT AUTHORIZED RETURN
UNDER SUBSECTION (B), WHICHEVER IS LATER.
(4) UPON CERTIFICATION OF THE AUCTION RESULTS BY THE
COMMISSION, THE AUCTION-CLEARING RETURN SHALL BECOME THE
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AUTHORIZED RETURN ON EQUITY FOR THE REGULATED SERVICE, AND
THE COMMISSION SHALL ADJUST CUSTOMER RATES IN ACCORDANCE WITH
SECTION 2202(F) NO LATER THAN 90 DAYS AFTER THE
CERTIFICATION.
(5) THE COMMISSION SHALL IMPLEMENT A TRUE-UP ADJUSTMENT
UNDER THIS SUBSECTION THAT IS CALCULATED AS THE DIFFERENCE
BETWEEN THE REVENUE ACTUALLY COLLECTED BY THE COVERED UTILITY
DURING THE PERIOD FROM THE FILING OF THE PETITION THROUGH THE
DATE ON WHICH ADJUSTED RATES TAKE EFFECT AND THE REVENUE THAT
WOULD HAVE BEEN COLLECTED DURING THAT PERIOD HAD THE AUCTION-
CLEARING RETURN BEEN REFLECTED IN RATES THROUGHOUT. THE
INTEREST ON THE DIFFERENCE SHALL ACCRUE AT THE AUCTION-
CLEARING RETURN AND BE CALCULATED FROM THE MIDPOINT OF THE
PERIOD.
(6) AN ADJUSTMENT TO CUSTOMER RATES REQUIRED BY THE
RESET OF THE DEFAULT AUTHORIZED RETURN UNDER SECTION 2202(B)
SHALL BE IMPLEMENTED IN ACCORDANCE WITH SECTION 2202(F)
INDEPENDENTLY OF AN AUCTION PETITION, AND THE TRUE-UP
ADJUSTMENT UNDER PARAGRAPH (5) SHALL APPLY ONLY TO THE PERIOD
COMMENCING ON THE DATE OF THE PETITION UNDER PARAGRAPH (1).
(B) COMMISSION-INITIATED AUCTION.--
(1) THE COMMISSION MAY, ON ITS OWN MOTION OR UPON
PETITION BY THE OFFICE OF CONSUMER ADVOCATE, ORDER THAT A
COMPETITIVE EQUITY AUCTION BE CONDUCTED FOR A COVERED UTILITY
IF THE COMMISSION FINDS REASONABLE CAUSE TO BELIEVE THAT THE
DEFAULT AUTHORIZED RETURN MATERIALLY EXCEEDS THE COVERED
UTILITY'S COST OF EQUITY FOR A REGULATED SERVICE.
(2) AN AUCTION INITIATED BY THE COMMISSION UNDER THIS
SUBSECTION MAY BE ORDERED NO EARLIER THAN 30 DAYS AFTER THE
EFFECTIVE DATE OF THIS PARAGRAPH OR THE MOST RECENT RESET OF
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THE DEFAULT AUTHORIZED RETURN UNDER SECTION 2202(B),
WHICHEVER IS LATER, AND NO LATER THAN 60 DAYS AFTER THE
RESET.
(3) UPON CERTIFICATION OF THE AUCTION RESULTS, THE
AUCTION-CLEARING RETURN SHALL BECOME THE AUTHORIZED RETURN ON
EQUITY FOR THE REGULATED SERVICE, AND THE COMMISSION SHALL
ADJUST CUSTOMER RATES IN ACCORDANCE WITH SECTION 2202(F) NO
LATER THAN 90 DAYS AFTER THE CERTIFICATION.
(4) THE COMMISSION SHALL IMPLEMENT A TRUE-UP ADJUSTMENT
UNDER THIS SUBSECTION THAT IS CALCULATED AS THE DIFFERENCE
BETWEEN THE REVENUE ACTUALLY COLLECTED BY THE COVERED UTILITY
DURING THE PERIOD FROM JANUARY 1 OF THE YEAR IN WHICH THE
AUCTION IS CONDUCTED THROUGH THE DATE ON WHICH ADJUSTED RATES
TAKE EFFECT AND THE REVENUE THAT WOULD HAVE BEEN COLLECTED
DURING THAT PERIOD HAD THE AUCTION-CLEARING RETURN BEEN
REFLECTED IN RATES THROUGHOUT. THE INTEREST ON THE DIFFERENCE
SHALL ACCRUE AT THE AUCTION-CLEARING RETURN AND BE CALCULATED
FROM THE MIDPOINT OF THE PERIOD.
(5) IF A COVERED UTILITY FAILS TO TAKE ALL STEPS
REQUIRED TO FACILITATE AN AUCTION ORDERED UNDER THIS
SUBSECTION ON THE TIMELINE PRESCRIBED BY THE COMMISSION, THE
DEFAULT AUTHORIZED RETURN FOR THAT REGULATED SERVICE SHALL BE
REDUCED BY 0.10 PERCENTAGE POINTS BEGINNING ON THE DATE OF
THE FAILURE AND CONTINUING UNTIL THE COVERED UTILITY HAS
COMPLIED WITH THIS SUBSECTION.
(6) IF THE COVERED UTILITY FAILS TO FACILITATE A
SUBSEQUENT COMMISSION-INITIATED AUCTION FOR THE SAME
REGULATED SERVICE, THE REDUCTION SHALL BE CUMULATIVE.
(7) UPON COMPLIANCE WITH THIS SUBSECTION, A REDUCTION
UNDER THIS SUBSECTION SHALL CEASE TO APPLY PROSPECTIVELY AND
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NO RETROACTIVE ADJUSTMENT SHALL BE MADE FOR ANY PERIOD DURING
WHICH THE REDUCTION WAS IN EFFECT.
(C) DURATION AND EFFECT.--
(1) HOLDERS OF AUCTION EQUITY INTERESTS ISSUED AT AN
AUCTION UNDER THIS SECTION SHALL RECEIVE THE AUCTION-CLEARING
RETURN FOR THE FULL DURATION OF THE INTERESTS. THE AUCTION-
CLEARING RETURN SHALL BE ADJUSTED FOR DIFFERENCES BETWEEN
REALIZED AND ANTICIPATED PROFITS IN A MANNER DETERMINED BY
THE COMMISSION'S ORDER ISSUED UNDER THIS SECTION.
(2) THE RATE OF RETURN UNDER PARAGRAPH (1), WHETHER
GREATER OR LESS THAN THE DEFAULT AUTHORIZED RETURN, SHALL
DETERMINE THE AUTHORIZED RETURN ON EQUITY FOR THE REGULATED
SERVICE IN ACCORDANCE WITH SUBSECTION (D), UNTIL THE
FOLLOWING JANUARY 1, AT WHICH TIME THE COVERED UTILITY MAY
ELECT THAT THE DEFAULT AUTHORIZED RETURN SHALL APPLY TO THE
COVERED UTILITY'S COMMON EQUITY IN THE REGULATED SERVICE.
(3) AN ELECTION MADE UNDER PARAGRAPH (2) SHALL NOT
AFFECT THE RETURN APPLICABLE TO OUTSTANDING AUCTION EQUITY
INTERESTS, WHICH SHALL CONTINUE TO RECEIVE THE AUCTION-
CLEARING RETURN FOR THE FULL DURATION OF THE INTERESTS.
FOLLOWING AN ELECTION, THE AUTHORIZED RETURN ON EQUITY FOR
THE REGULATED SERVICE SHALL BE DETERMINED IN ACCORDANCE WITH
SUBSECTION (D).
(D) MULTIPLE AUCTIONS.--
(1) WHERE DIFFERENT EQUITY INTERESTS IN A REGULATED
SERVICE BEAR DIFFERENT AUTHORIZED RATES OF RETURN, EITHER FOR
MULTIPLE AUCTIONS BEING CONDUCTED AT DIFFERENT TIMES OR THE
COVERED UTILITY HAS ELECTED THAT THE DEFAULT AUTHORIZED
RETURN SHALL APPLY TO THE COVERED UTILITY'S COMMON EQUITY
UNDER SUBSECTION (C), THE AUTHORIZED RETURN ON EQUITY FOR THE
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REGULATED SERVICE SHALL BE THE WEIGHTED AVERAGE OF THE RETURN
APPLICABLE TO EACH EQUITY INTEREST, WHICH SHALL BE WEIGHTED
BY ITS OUTSTANDING EQUITY AMOUNT.
(2) FOR THE PURPOSES UNDER PARAGRAPH (2), THE COVERED
UTILITY'S COMMON EQUITY SHALL BEAR THE AUCTION-CLEARING
RETURN ESTABLISHED IN THE MOST RECENT AUCTION OR THE DEFAULT
AUTHORIZED RETURN FOLLOWING AN ELECTION UNDER SUBSECTION (C).
IF NO AUCTION EQUITY INTERESTS REMAIN OUTSTANDING, THE
DEFAULT AUTHORIZED RETURN SHALL APPLY TO THE FULL EQUITY
COMPONENT OF THE REGULATED SERVICE.
(E) AUCTION MECHANISM.--THE COMMISSION SHALL OVERSEE A
SEALED-BID COMPETITIVE AUCTION ADMINISTERED INDEPENDENTLY OF THE
COVERED UTILITY. THE FOLLOWING SHALL APPLY:
(1) THE COMMISSION SHALL DETERMINE FOR EACH AUCTION
WHETHER BIDS ARE TO BE EXPRESSED AS AN ABSOLUTE NUMBER OR AS
A PREMIUM TO THE 10-YEAR TREASURY OR ANOTHER INDEX, WITH THE
APPLICABLE INTEREST RATE TO BE RESET PERIODICALLY.
(2) QUALIFIED BIDDERS SHALL BID THE MINIMUM TARGET
RETURN ON EQUITY THEY REQUIRE.
(3) ALL BIDS SHALL BE RANKED IN ASCENDING ORDER AND THE
COMMISSION SHALL ACCEPT BIDS IN THAT ORDER UNTIL THE TOTAL
AMOUNT OF EQUITY OFFERED IN THE AUCTION HAS BEEN FULLY
ALLOCATED.
(4) ALL SUCCESSFUL BIDDERS SHALL RECEIVE THE SAME RATE
OF RETURN, EQUAL TO THE HIGHEST ACCEPTED BID.
(5) IF THE AGGREGATE AMOUNT BID AT THE CLEARING RATE
EXCEEDS THE REMAINING AMOUNT OF EQUITY TO BE ALLOCATED, THE
BIDS SHALL BE ACCEPTED ON A PRO RATA BASIS. FOR THE AVOIDANCE
OF DOUBT, ALL BIDS SUBMITTED AT RETURNS BELOW THE CLEARING
RATE SHALL BE ACCEPTED IN FULL BUT A PRO RATA REDUCTION SHALL
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ONLY APPLY TO BIDS SUBMITTED AT THE CLEARING RATE ITSELF.
(6) THE AMOUNT OF EQUITY TO BE OFFERED WITHIN EACH
AUCTION SHALL BE THE GREATER OF 2.5% OF THE EQUITY COMPONENT
OF THE REGULATED SERVICE RATE BASE AND THE LESSER OF
$50,000,000 AND 5% OF THE EQUITY COMPONENT OF THE REGULATED
SERVICE RATE BASE.
(7) THE COMMISSION SHALL CERTIFY THE RESULTS OF AN
AUCTION IF AT LEAST FIVE QUALIFIED BIDDERS SUBMITTED BIDS AND
THE AGGREGATE EQUITY AMOUNT BID BY ALL QUALIFIED BIDDERS WAS
AT LEAST 1.5 TIMES THE TOTAL EQUITY AMOUNT OFFERED IN THE
AUCTION.
(8) IF EITHER THRESHOLD UNDER PARAGRAPH (7) IS NOT MET
IN A UTILITY-INITIATED AUCTION UNDER SUBSECTION (A), THE
AUCTION RESULT SHALL BE CERTIFIED IF THE AUCTION-CLEARING
RETURN DOES NOT EXCEED THE DEFAULT AUTHORIZED RETURN BY MORE
THAN TWO PERCENTAGE POINTS BUT, IF NOT EXCEEDED, THE AUCTION
RESULT SHALL BE VOID AND THE DEFAULT AUTHORIZED RETURN SHALL
BE APPLIED.
(9) IF EITHER THRESHOLD UNDER PARAGRAPH (7) IS NOT MET
IN A COMMISSION-INITIATED AUCTION UNDER SUBSECTION (B), THE
AUCTION RESULT SHALL BE VOID AND THE DEFAULT AUTHORIZED
RETURN SHALL CONTINUE TO APPLY.
(10) IN A COMMISSION-INITIATED AUCTION UNDER SUBSECTION
(B), REGARDLESS OF WHETHER THE PARTICIPATION THRESHOLDS ARE
MET, THE AUCTION RESULT SHALL BE BINDING ONLY IF THE AUCTION-
CLEARING RETURN IS LESS THAN THE DEFAULT AUTHORIZED RETURN.
(11) IF THE AUCTION-CLEARING RETURN EQUALS OR EXCEEDS
THE DEFAULT AUTHORIZED RETURN IN A COMMISSION-INITIATED
AUCTION UNDER SUBSECTION (B), THE DEFAULT AUTHORIZED RETURN
SHALL CONTINUE TO APPLY.
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(12) IF THE AGGREGATE EQUITY AMOUNT BID IN AN AUCTION
UNDER SUBSECTION (A) OR (B) IS LESS THAN THE TOTAL EQUITY
AMOUNT OFFERED, THE AUCTION-CLEARING RETURN SHALL APPLY TO
THE EQUITY AMOUNT ACTUALLY SUBSCRIBED AND THE DEFAULT
AUTHORIZED RETURN SHALL APPLY TO THE REMAINDER, IN WHICH THE
AUTHORIZED RETURN ON EQUITY FOR THE REGULATED SERVICE SHALL
BE DETERMINED IN ACCORDANCE WITH SUBSECTION (D).
(F) COST RECOVERY.--ALL REASONABLE COSTS INCURRED BY A
COVERED UTILITY IN CONNECTION WITH A COMPETITIVE EQUITY AUCTION
UNDER THIS SECTION, INCLUDING COSTS OF ANY REQUIRED SECURITIES
REGISTRATION OR OFFERING PREPARATION, REASONABLE REGISTRATION
COSTS UNDER SUBSECTION (G), REASONABLE MANAGEMENT TIME ALLOCABLE
TO THE AUCTION AND PROFESSIONAL FEES, SHALL BE TREATED AS
PRUDENTLY INCURRED COSTS FOR RATEMAKING PURPOSES AND SHALL BE
RECOVERABLE IN RATES.
(G) COMMISSION AUTHORITY AND REGULATIONS.--THE COMMISSION
SHALL ADOPT AND PROMULGATE RULES AND REGULATIONS TO IMPLEMENT
THE COMPETITIVE EQUITY AUCTION PROCEDURES UNDER THIS SECTION,
WHICH SHALL INCLUDE THE FOLLOWING:
(1) AN APPLICATION PROCESS, ELIGIBILITY CRITERIA AND
OTHER MEASURES NECESSARY TO ENSURE THAT BIDDERS ARE QUALIFIED
TO PARTICIPATE IN AN AUCTION.
(2) ONGOING DISCLOSURE OBLIGATIONS APPLICABLE TO THE
COVERED UTILITY AND TO HOLDERS OF AUCTION EQUITY INTERESTS.
(3) GUIDELINES FOR AN INDEPENDENT AUCTION ADMINISTRATOR
TO CONDUCT AN AUCTION.
(4) DETERMINATION OF THE DUTIES AND REQUISITE EXPERTISE
OF THE INDEPENDENT AUCTION ADMINISTRATOR.
(5) CONSUMER PROTECTION STANDARDS.
(6) AUCTION DISCLOSURE DOCUMENTATION WHICH STATES THAT
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THE DEPRECIATION AND AMORTIZATION SCHEDULE IS SUBJECT TO
PROSPECTIVE ADJUSTMENT IN SUBSEQUENT RATE PROCEEDINGS AND MAY
AFFECT THE TIMING OF RETURN OF CAPITAL TO HOLDERS OF AUCTION
EQUITY INTERESTS.
(7) REQUIREMENTS FOR THE INDEPENDENT AUCTION
ADMINISTRATOR TO DISCLOSE TO ALL QUALIFIED BIDDERS PRIOR TO
EACH AUCTION THE CONDITIONS IN WHICH THE AUCTION RESULT WILL
BE BINDING, INCLUDING WHETHER THE AUCTION IS UTILITY-
INITIATED OR COMMISSION-INITIATED AND THE CONSEQUENCES
THEREOF FOR BID ACCEPTANCE.
(8) THE FORM AND CONTENT OF THE DISCLOSURE REQUIRED
UNDER SUBSECTION (L)(2).
(H) SECURITIES LAW COMPLIANCE.--
(1) THE ECONOMIC INTERESTS OFFERED UNDER THIS SECTION
MAY CONSTITUTE SECURITIES WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 (48 STAT. 74, 15 U.S.C. § 77A ET
SEQ.), AS AMENDED, AND THE SECURITIES EXCHANGE ACT OF 1934
(48 STAT. 881, 15 U.S.C. § 78A ET SEQ.), AS AMENDED, AND
SHALL BE SUBJECT TO THE REGISTRATION REQUIREMENTS UNDER 66
PA.C.S. § 1901 (RELATING TO REGISTRATION OF SECURITIES TO BE
ISSUED OR ASSUMED).
(2) EACH AUCTION UNDER THIS SECTION SHALL BE STRUCTURED
TO QUALIFY FOR AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
FEDERAL SECURITIES LAW. PERMISSIBLE EXEMPTIONS MAY INCLUDE
LIMITING THE OFFERING TO ACCREDITED INVESTORS UNDER RULE 506
OF REGULATION D UNDER THE SECURITIES ACT OF 1933 OR
CONDUCTING AN INTRASTATE OFFERING EXEMPT UNDER SECTION 3(A)
(11) OF THE SECURITIES ACT OF 1933 AND APPLICABLE RULES UNDER
THE SECURITIES ACT OF 1933.
(3) THE COMMISSION MAY, IN ITS DISCRETION, DIRECT THAT A
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SPECIFIC AUCTION BE CONDUCTED ON A REGISTERED BASIS IF THE
COMMISSION DETERMINES, BASED ON THE EXPECTED SIZE OF THE
OFFERING AND AN ANALYSIS OF ANTICIPATED INVESTOR DEMAND, THE
FOLLOWING:
(I) THE EXPECTED REDUCTION IN THE AUCTION-CLEARING
RETURN ATTRIBUTABLE TO BROADER INVESTOR PARTICIPATION
ENABLED BY REGISTRATION IS REASONABLY EXPECTED TO
OUTWEIGH THE COSTS AND DELAYS OF THE REGISTRATION
PROCESS.
(II) THE AUCTION WILL NOT BE DELAYED BY MORE THAN 30
DAYS BEYOND THE TIMELINE THAT WOULD APPLY TO AN EXEMPT
OFFERING.
(4) ANY DIRECTION BY THE COMMISSION TO CONDUCT AN
AUCTION ON A REGISTERED BASIS SHALL BE ISSUED BY THE
COMMISSION SUFFICIENTLY IN ADVANCE OF THE COVERED UTILITY'S
AUCTION PETITION TO PERMIT TIMELY REGISTRATION.
(5) NOTHING IN THIS SUBSECTION SHALL BE CONSTRUED TO
CONFER UPON THE COMMISSION ANY AUTHORITY TO REGULATE
SECURITIES EXCEPT AS EXPRESSLY PROVIDED IN THIS SUBSECTION.
(I) INSTRUMENT DESIGN.--
(1) A COVERED UTILITY MAY NOT BE REQUIRED TO OFFER ITS
COMMON STOCK FOR SALE IN THE AUCTION, BUT THE AUCTION EQUITY
INTERESTS OFFERED SHALL, AS APPROVED BY THE COMMISSION,
PROVIDE PROSPECTIVE INVESTORS WITH THE FOLLOWING:
(I) ECONOMICALLY EQUIVALENT POSITION TO THAT OF THE
COVERED UTILITY'S EQUITY INTEREST IN THE REGULATED
SERVICE WHICH MAY CONSIST OF THE COVERED UTILITY'S COMMON
STOCK WHERE AUCTION EQUITY INTERESTS ARE ISSUED DIRECTLY
BY THE COVERED UTILITY OR THE COVERED UTILITY'S RETAINED
STOCK INTEREST IN THE REGULATED SERVICE CORPORATION WHERE
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THE INTERESTS ARE ISSUED BY A REGULATED SERVICE
CORPORATION.
(II) ADEQUATE PROTECTIONS AGAINST DILUTION OR
IMPAIRMENT OF VALUE THROUGH RELATED-PARTY TRANSACTIONS OR
OTHER TRANSFERS INVOLVING THE CORPORATION'S PARENT
HOLDING COMPANY.
(III) IF THE COVERED UTILITY'S REALIZED PROFITS OF
THE REGULATED SERVICE IN EACH PERIOD EQUAL THOSE EMBEDDED
BY THE COMMISSION IN THE RATES APPROVED TO ACHIEVE THE
AUTHORIZED RETURN ON EQUITY, PROSPECTIVE PERIODIC
DISTRIBUTIONS CALIBRATED FOR HOLDERS OF AUCTION EQUITY
INTERESTS TO REALIZE AN INTERNAL RATE OF RETURN EQUAL TO
THE AUCTION-CLEARING RETURN WHICH ACCOUNTS FOR PERIODIC
DISTRIBUTIONS AND ANY RETURN OF EQUITY CAPITAL OVER THE
LIFE OF THE INTERESTS.
(IV) A STATED INITIAL EQUITY AMOUNT PER AUCTION
EQUITY INTEREST EQUAL TO THE PURCHASE PRICE PAID BY THE
WINNING BIDDER IN THE AUCTION, WHICH SHALL BE AN EQUITY
AMOUNT TO BE RETURNED TO HOLDERS OVER THE LIFE OF THE
INTERESTS AT A RATE AND ON A SCHEDULE CONSISTENT WITH THE
COMMISSION'S TREATMENT OF RATE BASE DEPRECIATION AND
AMORTIZATION FOR THE REGULATED SERVICE FOR RATEMAKING
PURPOSES. IF THE EQUITY COMPONENT OF THE REGULATED
SERVICE RATE BASE IS REDUCED THROUGH DEPRECIATION AND
AMORTIZATION, A COMMENSURATE PORTION OF THE INITIAL
EQUITY AMOUNT SHALL BE RETURNED TO HOLDERS.
(V) A SPECIFICATION OF THE SHORTFALLS AND EXCESSES
IN REALIZED PROFITS, AS DETERMINED BY THE COMMISSION
UNDER PARAGRAPH (2).
(2) THE COMMISSION SHALL ESTABLISH RULES OR PROMULGATE
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REGULATIONS SPECIFYING THE METHODS AND CALCULATIONS IN WHICH
SHORTFALLS AND EXCESSES IN REALIZED PROFITS OF THE REGULATED
SERVICE RELATIVE TO THE EARNINGS EMBEDDED IN APPROVED RATES
ARE TO BE ALLOCATED BETWEEN HOLDERS OF AUCTION EQUITY
INTERESTS AND THE COVERED UTILITY'S COMMON EQUITY, INCLUDING
THE ALLOCATION METHODS IN THE EVENT OF MULTIPLE OUTSTANDING
SERIES OF AUCTION EQUITY INTERESTS.
(3) THE COMMISSION'S REGULATIONS GOVERNING AN AUCTION
UNDER THIS SECTION SHALL SPECIFY THE INITIAL EQUITY AMOUNT
PER AUCTION EQUITY INTEREST, THE FORMULA FOR CALCULATING
PERIODIC DISTRIBUTIONS BY APPLYING THE AUCTION-CLEARING
RETURN TO THE OUTSTANDING EQUITY BALANCE FOR EACH PERIOD AND
THE SCHEDULE FOR RETURN OF EQUITY CAPITAL. THE COMMISSION
SHALL ENSURE THAT HOLDERS OF AUCTION EQUITY INTERESTS WILL
REALIZE AN INTERNAL RATE OF RETURN EQUAL TO THE AUCTION-
CLEARING RETURN IF THE COVERED UTILITY'S REALIZED PROFITS OF
THE REGULATED SERVICE IN EACH PERIOD EQUAL THOSE EMBEDDED IN
THE RATES APPROVED TO ACHIEVE THE AUTHORIZED RETURN ON
EQUITY.
(4) EACH SERIES OF AUCTION EQUITY INTERESTS UNDER THIS
SUBSECTION SHALL BE REDEEMED AT ITS BOOK VALUE CURRENTLY IN
EFFECT UNTIL THE EARLIER OF 40 YEARS FROM THE DATE OF
ISSUANCE OR THE END OF THE FIRST FISCAL QUARTER IN WHICH THE
OUTSTANDING EQUITY AMOUNT OF SUCH SERIES IS LESS THAN 5% OF
THE INITIAL EQUITY AMOUNT AT ISSUANCE.
(5) THE COVERED UTILITY OR REGULATED SERVICE
CORPORATION, AS APPLICABLE, SHALL FUND A REDEMPTION UNDER
PARAGRAPH (4), WHETHER THROUGH RETAINED EARNINGS, A CAPITAL
CONTRIBUTION FROM THE COVERED UTILITY'S PARENT COMPANY OR ANY
OTHER SOURCE OF EQUITY CAPITAL. UPON THE REDEMPTION, THE
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EQUITY REPRESENTED BY THE REDEEMED SERIES SHALL REVERT TO THE
COVERED UTILITY'S COMMON EQUITY IN THE REGULATED SERVICE. THE
COMMISSION MAY DEFER THE MANDATORY REDEMPTION DATE BY NOT
MORE THAN TWO YEARS UPON A DEMONSTRATION BY THE COVERED
UTILITY THAT IMMEDIATE REDEMPTION WOULD MATERIALLY IMPAIR ITS
FINANCIAL CONDITION.
(6) IN THE EVENT OF A MERGER, ACQUISITION OR CHANGE OF
CONTROL OF THE COVERED UTILITY OR, WHERE APPLICABLE, THE
REGULATED SERVICE CORPORATION, THE SUCCESSOR ENTITY SHALL
ASSUME ALL OBLIGATIONS TO HOLDERS OF OUTSTANDING AUCTION
EQUITY INTERESTS ON TERMS NO LESS FAVORABLE THAN THE TERMS IN
EFFECT IMMEDIATELY PRIOR TO THE TRANSACTION.
(7) A TRANSACTION UNDER PARAGRAPH (6) SHALL NOT BE
CONSUMMATED WITHOUT DETERMINATION BY THE COMMISSION THAT THE
RIGHTS OF HOLDERS OF AUCTION EQUITY INTERESTS WILL BE
ADEQUATELY PRESERVED. THE COMMISSION MAY REQUIRE THE TERMS OF
EACH SERIES OF AUCTION EQUITY INTERESTS TO INCLUDE A
PROVISION ENTITLING HOLDERS TO REDEMPTION AT THE BOOK VALUE
THEN CURRENTLY IN EFFECT UPON ANY CHANGE OF CONTROL, AT THE
OPTION OF THE HOLDER.
(8) IN THE EVENT OF THE INSOLVENCY OR DISSOLUTION OF A
REGULATED SERVICE CORPORATION OR REGULATED SERVICE LLC OR THE
PERMANENT DISCONTINUATION OF THE REGULATED SERVICE TO WHICH
AUCTION EQUITY INTERESTS RELATE, OUTSTANDING AUCTION EQUITY
INTERESTS SHALL PARTICIPATE IN ANY DISTRIBUTION OF REMAINING
ASSETS ON A PARI PASSU BASIS WITH THE COVERED UTILITY'S
COMMON EQUITY IN THE REGULATED SERVICE, IN PROPORTION TO
THEIR RESPECTIVE OUTSTANDING EQUITY AMOUNTS, IN ACCORDANCE
WITH THE COMMISSION'S SPECIFICATIONS UNDER PARAGRAPH (2).
(9) NOTHING UNDER PARAGRAPH (8) SHALL BE CONSTRUED TO
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CREATE A PRIORITY OR PREFERENCE IN FAVOR OF, OR AGAINST,
HOLDERS OF AUCTION EQUITY INTERESTS RELATIVE TO THE COVERED
UTILITY'S COMMON EQUITY.
(J) PARTICIPANTS.--
(1) AN AUCTION UNDER THIS SECTION SHALL BE OPEN, AT
MINIMUM, TO ALL ACCREDITED INVESTORS AS THAT TERM IS DEFINED
UNDER APPLICABLE FEDERAL SECURITIES LAW.
(2) EACH QUALIFIED BIDDER SHALL, AS A CONDITION OF
PARTICIPATION, CERTIFY IN WRITING TO THE INDEPENDENT AUCTION
ADMINISTRATOR THE FOLLOWING:
(I) THE BIDDER IS SUBMITTING ITS BID BASED SOLELY ON
THE BIDDER'S OWN ASSESSMENT OF THE RISK-ADJUSTED
FINANCIAL RETURN OF THE AUCTION EQUITY INTEREST AND NOT
FOR THE PURPOSE OR WITH THE EFFECT OF ARTIFICIALLY
SUPPRESSING OR INFLATING THE AUCTION-CLEARING RETURN.
(II) THE BIDDER IS NOT ACTING IN CONCERT WITH ANY
OTHER BIDDER OR WITH THE COVERED UTILITY OR ANY OF ITS
AFFILIATES WITH RESPECT TO THE FORMULATION OF ITS BID.
(3) A BIDDER THAT IS A COVERED UTILITY SUBJECT TO COST-
OF-SERVICE REGULATION BY A FEDERAL OR STATE REGULATORY
AUTHORITY, OR A HOLDING COMPANY THAT DIRECTLY OR INDIRECTLY
CONTROLS THE COVERED UTILITY, SHALL NOT BE ELIGIBLE TO
PARTICIPATE AS A BIDDER, EXCEPT THAT THE COVERED UTILITY, ITS
PARENT COMPANY AND ANY AFFILIATES MAY PARTICIPATE AS BIDDERS
AND SHALL BE SUBJECT TO ANY EXISTING CODE OF CONDUCT POLICIES
FOR AFFILIATE TRANSACTIONS AND ANY FURTHER ELIGIBILITY
REQUIREMENTS ESTABLISHED BY THE COMMISSION TO PROHIBIT
INAPPROPRIATE PREFERENTIAL TREATMENT IN THE BIDDING PROCESS.
(4) THE EXCLUSION UNDER PARAGRAPH (3) SHALL NOT APPLY TO
A REGISTERED INVESTMENT COMPANY, INVESTMENT ADVISER OR OTHER
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INSTITUTIONAL INVESTOR WHOSE OWNERSHIP OF A COVERED UTILITY
IS SOLELY AS A PASSIVE INVESTOR IN DIVERSIFIED PORTFOLIOS.
HOLDINGS BY THE INSTITUTIONAL INVESTORS IN AUCTION EQUITY
INTERESTS ISSUED UNDER THIS ARTICLE SHALL NOT BE COUNTED
TOWARD AN INVESTMENT LIMITATION APPLICABLE TO OWNERSHIP OF
THE COVERED UTILITY OR THE COVERED UTILITY'S COMMON EQUITY
UNDER APPLICABLE STATE LAW.
(5) THE COMMISSION SHALL ESTABLISH RULES OR PROMULGATE
REGULATIONS TO IMPLEMENT THE EXCLUSION AND CERTIFICATION
REQUIREMENTS UNDER THIS SUBSECTION, INCLUDING PROCEDURES FOR
INVESTIGATION AND DISQUALIFICATION OF BIDDERS THAT SUBMIT
FALSE CERTIFICATIONS OR ARE FOUND TO HAVE VIOLATED THE
PROHIBITION ON COORDINATED BIDDING.
(K) MISCONDUCT AND RISK ATTRIBUTION.--
(1) IF THE COMMISSION OR A COURT OF COMPETENT
JURISDICTION HAS MADE A FORMAL FINDING THAT A COVERED UTILITY
HAS ENGAGED IN UNLAWFUL OR IMPRUDENT CONDUCT WHICH HAS
MATERIALLY INCREASED THE COVERED UTILITY'S COST OF EQUITY FOR
A REGULATED SERVICE, THE COMMISSION MAY EXCLUDE THE PORTION
OF AN INCREASE IN THE AUTHORIZED RETURN ON EQUITY FOR THE
REGULATED SERVICE THAT IS ATTRIBUTABLE TO THE CONDUCT FROM
THE RETURN APPLICABLE TO THE COVERED UTILITY'S COMMON EQUITY.
(2) AN AUCTION EQUITY INTEREST, WHETHER ISSUED BEFORE OR
AFTER A FINDING UNDER PARAGRAPH (1), SHALL NOT BE SUBJECT TO
THE EXCLUSION UNDER PARAGRAPH (1) AND ALL AUCTION EQUITY
INTERESTS SHALL CONTINUE TO BEAR THE AUCTION-CLEARING RETURN
ESTABLISHED IN THE AUCTION IN WHICH THE INTERESTS WERE ISSUED
WITHOUT REDUCTION ON ACCOUNT OF ANY EXCLUSION UNDER THIS
SUBSECTION.
(3) NOTHING IN THIS SUBSECTION SHALL LIMIT THE AUTHORITY
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OF THE COMMISSION TO IMPOSE PENALTIES, DISALLOWANCES OR OTHER
REMEDIES AVAILABLE UNDER APPLICABLE LAW.
(L) REGULATED SERVICE CORPORATION AND REGULATED SERVICE
LLC.--
(1) A COVERED UTILITY MAY, AT ANY TIME BEFORE OR AFTER
CONDUCTING A COMPETITIVE EQUITY AUCTION, FORM A REGULATED
SERVICE CORPORATION AND A REGULATED SERVICE LLC FOR A
REGULATED SERVICE. THE FOLLOWING SHALL APPLY:
(I) THE REGULATED SERVICE CORPORATION FORMED SHALL
BE A WHOLLY OWNED SUBSIDIARY OF THE COVERED UTILITY,
ORGANIZED AS A CORPORATION UNDER THE LAWS OF ANY STATE
AND TREATED AS A CORPORATION FOR FEDERAL INCOME TAX
PURPOSES.
(II) THE REGULATED SERVICE LLC SHALL BE A WHOLLY
OWNED SUBSIDIARY OF THE REGULATED SERVICE CORPORATION,
ORGANIZED AS A LIMITED LIABILITY COMPANY AND TREATED AS A
DISREGARDED ENTITY FOR FEDERAL INCOME TAX PURPOSES.
(III) THE REGULATED SERVICE LLC SHALL HOLD ALL
MATERIAL ASSETS, RIGHTS, FRANCHISES AND OBLIGATIONS
ASSOCIATED WITH THE REGULATED SERVICE.
(IV) THE REGULATED SERVICE CORPORATION SHALL SERVE
AS THE ISSUER OF AUCTION EQUITY INTERESTS FOR THAT
REGULATED SERVICE.
(V) THE FORMATION OF A REGULATED SERVICE CORPORATION
AND REGULATED SERVICE LLC SHALL NOT BE A PREREQUISITE TO
CONDUCT AN AUCTION UNDER THIS SECTION.
(VI) THE ABSENCE OF THE ENTITIES SHALL NOT IMPAIR
THE VALIDITY OF AUCTION EQUITY INTERESTS ISSUED BY THE
COVERED UTILITY.
(2) IN A COMPETITIVE EQUITY AUCTION CONDUCTED PRIOR TO A
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REGULATED SERVICE CORPORATION AND REGULATED SERVICE LLC BEING
ESTABLISHED, THE COMMISSION SHALL REQUIRE THE COVERED UTILITY
TO DISCLOSE TO ALL QUALIFIED BIDDERS THAT AUCTION EQUITY
INTERESTS ARE BEING ISSUED AS DIRECT OBLIGATIONS OF THE
COVERED UTILITY AND ARE SUBJECT TO THE RISKS OF ANY
INSOLVENCY, BANKRUPTCY OR RESTRUCTURING PROCEEDINGS AFFECTING
THE COVERED UTILITY OR THE COVERED UTILITY'S AFFILIATES.
(3) THE COMMISSION SHALL REQUIRE EACH COVERED UTILITY TO
ENSURE THAT ALL LONG-TERM INDEBTEDNESS WITH A STATED MATURITY
GREATER THAN ONE YEAR ISSUED OR INCURRED ON OR AFTER THE
EFFECTIVE DATE OF THIS PARAGRAPH, WHETHER IN THE FORM OF
BONDS, NOTES, DEBENTURES OR OTHERWISE, INCLUDES A COVENANT
EXPRESSLY PERMITTING THE COVERED UTILITY TO TRANSFER THE
ASSETS, FRANCHISES, RIGHTS AND OBLIGATIONS ASSOCIATED WITH
EACH REGULATED SERVICE TO A REGULATED SERVICE CORPORATION OR
REGULATED SERVICE LLC WITHOUT THE TRANSFER CONSTITUTING A
DEFAULT, EVENT OF DEFAULT OR BREACH UNDER THE INDEBTEDNESS.
(4) THE COMMISSION MAY NOT APPROVE ANY LONG-TERM DEBT
FINANCING BY A COVERED UTILITY THAT DOES NOT INCLUDE A
COVENANT UNDER PARAGRAPH (3).
(5) NOTHING IN THIS SUBSECTION SHALL BE CONSTRUED TO
REQUIRE A COVERED UTILITY TO RESTRUCTURE, REFINANCE OR ASSIGN
ANY INDEBTEDNESS OUTSTANDING AS OF THE EFFECTIVE DATE OF THIS
PARAGRAPH IN ADVANCE OF THE FORMATION OF A REGULATED SERVICE
LLC UNDER PARAGRAPH (1).
(6) EACH COVERED UTILITY THAT HAS NOT YET ESTABLISHED A
REGULATED SERVICE CORPORATION AND REGULATED SERVICE LLC SHALL
USE COMMERCIALLY REASONABLE EFFORTS TO DO SO BY NO LATER THAN
FIVE YEARS AFTER THE EFFECTIVE DATE OF THIS PARAGRAPH OR FIVE
YEARS AFTER THE DATE OF THE COVERED UTILITY'S FIRST
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COMPETITIVE EQUITY AUCTION, WHICHEVER IS LATER. THE
COMMISSION MAY EXTEND THE PERIOD UNDER THIS PARAGRAPH UPON A
SHOWING BY THE COVERED UTILITY OF GOOD CAUSE, WHICH MAY
INCLUDE THE INABILITY TO OBTAIN REQUIRED BONDHOLDER OR
CREDITOR CONSENTS DESPITE COMMERCIALLY REASONABLE EFFORTS.
(7) WHENEVER A COVERED UTILITY HAS ESTABLISHED A
REGULATED SERVICE CORPORATION AND REGULATED SERVICE LLC, EACH
ENTITY SHALL BE STRUCTURED AND OPERATED AS A BANKRUPTCY-
REMOTE SPECIAL-PURPOSE ENTITY. THE COMMISSION SHALL ADOPT OR
PROMULGATE RULES OR REGULATIONS TO ENSURE THE COMPLIANCE OF A
REGULATED SERVICE CORPORATION AND REGULATED SERVICE LLC,
WHICH SHALL INCLUDE THE FOLLOWING:
(I) MAINTENANCE OF BOOKS OF ACCOUNT, BANK ACCOUNTS
AND FINANCIAL RECORDS SEPARATE FROM THOSE OF THE COVERED
UTILITY AND ANY AFFILIATE.
(II) PROHIBITION ON COMMINGLING OF ASSETS.
(III) REQUIREMENTS FOR THE ORGANIZATIONAL DOCUMENTS
OF THE REGULATED SERVICE LLC TO INCLUDE AT LEAST ONE
INDEPENDENT MANAGER WHOSE AFFIRMATIVE CONSENT IS REQUIRED
FOR A VOLUNTARY BANKRUPTCY FILING BY THE REGULATED
SERVICE LLC OR THE REGULATED SERVICE CORPORATION.
(IV) A COVENANT BY THE COVERED UTILITY NOT TO CAUSE
OR ENCOURAGE ANY INVOLUNTARY BANKRUPTCY FILING AGAINST
THE REGULATED SERVICE CORPORATION OR THE REGULATED
SERVICE LLC.
(V) RESTRICTIONS ON INDEBTEDNESS OF THE REGULATED
SERVICE CORPORATION AND THE REGULATED SERVICE LLC UNLESS
APPROVED BY THE COMMISSION.
(8) THE REGULATED SERVICE CORPORATION MAY NOT CONDUCT
ACTIVITIES OTHER THAN HOLDING A MEMBERSHIP INTEREST IN THE
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REGULATED SERVICE LLC AND SERVING AS THE ISSUER OF AUCTION
EQUITY INTERESTS. THE CORPORATION MAY NOT HOLD ANY ASSETS
OTHER THAN THE CORPORATION'S MEMBERSHIP INTEREST IN THE
REGULATED SERVICE LLC AND ANY CASH OR OTHER ASSETS INCIDENTAL
THERETO.
(9) FORMATION OF BOTH THE REGULATED SERVICE CORPORATION
AND THE REGULATED SERVICE LLC SHALL REQUIRE ANY APPROVALS
THAT MAY BE REQUIRED UNDER APPLICABLE LAW, INCLUDING ANY
CERTIFICATE OF PUBLIC CONVENIENCE REQUIRED UNDER 66 PA.C.S. §
1102 (RELATING TO ENUMERATION OF ACTS REQUIRING CERTIFICATE)
FOR THE TRANSFER OF UTILITY ASSETS OR FRANCHISES, AND ANY
APPROVAL REQUIRED UNDER 66 PA.C.S. CH. 21 (RELATING TO
RELATIONS WITH AFFILIATED INTERESTS) FOR TRANSACTIONS BETWEEN
THE COVERED UTILITY AND THE ENTITIES.
(10) IF ANY ASSETS ARE ASSOCIATED WITH MORE THAN ONE
REGULATED SERVICE, THE ASSETS MAY BE HELD BY THE REGULATED
SERVICE LLC AS CO-OWNER WITH ONE OR MORE OTHER REGULATED
SERVICE LLCS, WITH EACH LLC'S INTEREST PROPORTIONALLY
ALLOCATED IN A MANNER APPROVED BY THE COMMISSION FOR
RATEMAKING PURPOSES.
(11) FOR THE CAPITAL STRUCTURE AND INDEBTEDNESS OF THE
REGULATED SERVICE LLC, THE FOLLOWING APPLY:
(I) EACH REGULATED SERVICE LLC SHALL MAINTAIN A
CAPITAL STRUCTURE FOR THE REGULATED SERVICE CONSISTENT
WITH THE CAPITAL STRUCTURE AUTHORIZED BY THE COMMISSION
FOR RATEMAKING PURPOSES, INCLUDING DEBT AND EQUITY
COMPONENTS.
(II) THE EQUITY COMPONENT OF THE REGULATED SERVICE
FOR THE APPLICABLE AUTHORIZED RETURN ON EQUITY SHALL
CONSIST OF THE REGULATED SERVICE CORPORATION'S EQUITY
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INTEREST IN THE REGULATED SERVICE LLC WHICH IS FUNDED BY
THE PROCEEDS OF AUCTION EQUITY INTERESTS AND THE COVERED
UTILITY'S RETAINED INTEREST.
(III) FOR RATEMAKING PURPOSES, THE INTEREST ON
INDEBTEDNESS OF THE REGULATED SERVICE LLC SHALL BE
TREATED AS A COST OF THE REGULATED SERVICE.
(IV) UPON FORMATION OF A REGULATED SERVICE LLC, THE
COMMISSION SHALL DETERMINE THE PORTION OF THE COVERED
UTILITY'S OUTSTANDING INDEBTEDNESS THAT SHALL BE
ALLOCATED TO THE REGULATED SERVICE BY APPLYING THE
METHODOLOGY USED OR TO BE USED TO ALLOCATE THE COVERED
UTILITY'S CAPITAL STRUCTURE AMONG REGULATED SERVICES FOR
RATEMAKING PURPOSES.
(V) THE REGULATED SERVICE LLC SHALL ASSUME ALLOCATED
INDEBTEDNESS AS PRIMARY OBLIGOR IN WHICH THE COVERED
UTILITY SHALL PROVIDE AN UNCONDITIONAL AND IRREVOCABLE
GUARANTY OF ALL ASSUMED INDEBTEDNESS FOR THE REMAINING
TERM OF EACH OBLIGATION.
(VI) AN ASSUMPTION OF ALLOCATED INDEBTEDNESS SHALL
NOT CONSTITUTE A DEFAULT, ACCELERATION EVENT, ASSIGNMENT
OR BREACH UNDER THE INDEBTEDNESS, NOTWITHSTANDING ANY
PROVISION OF THE APPLICABLE INSTRUMENT TO THE CONTRARY.
(VII) UPON FORMATION, THE REGULATED SERVICE LLC
SHALL ISSUE ITS OWN DEBT TO FINANCE THE DEBT COMPONENT OF
THE REGULATED SERVICE LLC'S CAPITAL STRUCTURE WHICH SHALL
BE SECURED BY THE REGULATED SERVICE ASSETS HELD BY THE
REGULATED SERVICE LLC.
(VIII) UNLESS THE COMMISSION DETERMINES THAT A
GUARANTY IS NECESSARY TO OBTAIN FINANCING ON TERMS
CONSISTENT WITH PUBLIC INTEREST, THE REGULATED SERVICE
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LLC'S DEBT MAY NOT REQUIRE A GUARANTY BY THE COVERED
UTILITY. IF THE COMMISSION DETERMINES THAT A GUARANTY IS
NECESSARY, IT SHALL BE LIMITED IN SCOPE AND FOR A MINIMUM
DURATION TO FULFILL ITS OBLIGATIONS.
(IX) FOR ANY PERIOD DURING WHICH THE COVERED UTILITY
GUARANTEES INDEBTEDNESS OF A REGULATED SERVICE LLC, THE
COVERED UTILITY SHALL BE ENTITLED TO A GUARANTY FEE IN AN
AMOUNT AND UNDER THE TERMS DETERMINED BY THE COMMISSION.
(X) THE RATE BASE OF THE REGULATED SERVICE LLC SHALL
BE DETERMINED IN ACCORDANCE SECTION 2202(K).
(12) UPON ESTABLISHMENT OF A REGULATED SERVICE
CORPORATION AND REGULATED SERVICE LLC, THE REGULATED SERVICE
CORPORATION SHALL BECOME THE ISSUER OF ALL SUBSEQUENT AUCTION
EQUITY INTERESTS FOR THE APPLICABLE REGULATED SERVICE.
(13) IF IT IS DETERMINED TO BE IN THE PUBLIC INTEREST,
THE COMMISSION MAY AUTHORIZE THE COVERED UTILITY TO OFFER
HOLDERS OF OUTSTANDING AUCTION EQUITY INTERESTS THE OPTION TO
CONVERT THEIR INTERESTS TO EQUIVALENT INTERESTS ISSUED BY THE
REGULATED SERVICE CORPORATION.
(14) NOTWITHSTANDING ANY OTHER PROVISION UNDER THIS
SUBSECTION, A COVERED UTILITY SHALL NOT BE REQUIRED TO FORM A
REGULATED SERVICE CORPORATION OR REGULATED SERVICE LLC IF THE
FOLLOWING APPLY:
(I) THE COVERED UTILITY PROVIDES ONLY ONE REGULATED
SERVICE SUBJECT TO THE JURISDICTION OF THE COMMISSION OR
IF MULTIPLE CATEGORIES OF SERVICE HAVE BEEN DETERMINED BY
THE COMMISSION TO WARRANT CONSOLIDATED TREATMENT AS A
SINGLE REGULATED SERVICE.
(II) THE COVERED UTILITY DOES NOT ENGAGE IN ANY
MATERIAL BUSINESS ACTIVITY OTHER THAN THE PROVISION OF
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THAT REGULATED SERVICE.
(15) A COVERED UTILITY THAT MEETS THE REQUIREMENTS UNDER
PARAGRAPH (14) MAY ISSUE AUCTION EQUITY INTERESTS DIRECTLY,
IN WHICH CASE ALL REFERENCES UNDER THIS ARTICLE TO A
REGULATED SERVICE CORPORATION OR REGULATED SERVICE LLC SHALL
BE CONSTRUED AS REFERENCES TO THE COVERED UTILITY WHEN
APPLICABLE.
SECTION 2204. ANNUAL REPORTING AND TRANSPARENCY.
(A) REPORTS.--NOT LATER THAN JANUARY 15 OF EACH YEAR, THE
COMMISSION SHALL SUBMIT A REPORT TO THE GOVERNOR, THE
CHAIRPERSON AND MINORITY CHAIRPERSON OF THE CONSUMER PROTECTION
AND PROFESSIONAL LICENSURE COMMITTEE OF THE SENATE AND THE
CHAIRPERSON AND MINORITY CHAIRPERSON OF THE CONSUMER PROTECTION,
TECHNOLOGY AND UTILITIES COMMITTEE OF THE HOUSE OF
REPRESENTATIVES ON THE IMPLEMENTATION OF THIS ARTICLE. THE
ANNUAL REPORT SHALL INCLUDE ALL OF THE FOLLOWING:
(1) EACH COVERED UTILITY'S REQUESTED RETURN ON EQUITY,
RATE OF RETURN AND CAPITALIZATION MIX PROPOSED AS PART OF THE
COVERED UTILITY'S MOST RECENT BASE RATE FILING UNDER 66
PA.C.S. § 1308(D) (RELATING TO VOLUNTARY CHANGES IN RATES),
INCLUDING THE CORRESPONDING DATA FOR THE PRECEDING THREE BASE
RATE FILINGS.
(2) THE ACTUAL RETURN ON EQUITY, RATE OF RETURN AND
CAPITALIZATION MIXES AUTHORIZED BY THE COMMISSION FOR EACH
COVERED UTILITY IN THE MOST RECENT THREE BASE RATE
PROCEEDINGS.
(3) THE RESULTS OF ANY COMPETITIVE EQUITY AUCTIONS
CONDUCTED UNDER THIS ARTICLE FOR THE PREVIOUS FIVE CALENDAR
YEARS.
(4) AN ANALYSIS OF THE IMPACT ON AVERAGE CUSTOMER RATES
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RESULTING FROM IMPLEMENTATION OF THIS ARTICLE.
(5) IN CLEAR AND ACCESSIBLE LANGUAGE, A DESCRIPTION OF
HOW AUTHORIZED RETURNS ON EQUITY HAVE CHANGED, REFLECT NEW
CIRCUMSTANCES OR REMAINED THE SAME DURING THE PREVIOUS YEAR.
(6) ALL DATA USED FOR CALCULATIONS UNDER THIS ARTICLE
WHICH IS NOT PUBLICLY AVAILABLE, INCLUDING AN EXPLANATION ON
THE NECESSITY FOR USING NONPUBLIC DATA.
(7) A SUMMARY OF ENFORCEMENT ACTIONS TAKEN UNDER THIS
ARTICLE.
(B) PUBLIC INFORMATION.--THE ANNUAL REPORT UNDER SUBSECTION
(A) SHALL BE MADE PUBLICLY AVAILABLE ON THE COMMISSION'S
PUBLICLY ACCESSIBLE INTERNET WEBSITE.
SECTION 2205. APPLICABILITY TO STATE-JURISDICTIONAL RATE BASE.
THIS ARTICLE SHALL APPLY ONLY TO THE PORTION OF A COVERED
UTILITY'S RATE BASE THAT IS SUBJECT TO THE RATEMAKING
JURISDICTION OF THE COMMISSION. NOTHING IN THIS ARTICLE SHALL BE
CONSTRUED TO APPLY TO, MODIFY OR OTHERWISE AFFECT THE RETURN ON
EQUITY APPLICABLE TO ANY FACILITIES, ASSETS OR SERVICES FOR
WHICH THE RATE OF RETURN IS DETERMINED BY THE FEDERAL ENERGY
REGULATORY COMMISSION OR ANY OTHER FEDERAL REGULATORY AUTHORITY.
TO THE EXTENT THAT A COVERED UTILITY'S RATE BASE INCLUDES BOTH
STATE-JURISDICTIONAL AND FEDERALLY JURISDICTIONAL COMPONENTS,
THE COMMISSION SHALL ESTABLISH PROCEDURES TO ALLOCATE THE RATE
BASE BETWEEN THOSE COMPONENTS. THE AUTHORIZED RETURN ON EQUITY
DETERMINED UNDER THIS ARTICLE SHALL BE APPLIED SOLELY TO THE
COMPONENTS SUBJECT TO THE COMMISSION'S JURISDICTION.
SECTION 2206. APPLICABILITY TO RATEMAKING.
(A) APPLICATION.--THIS ARTICLE SHALL APPLY TO EACH COVERED
UTILITY AND EACH REGULATED SERVICE OF A COVERED UTILITY AS OF
THE EFFECTIVE DATE OF THIS SUBSECTION REGARDLESS OF WHETHER A
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RATE PROCEEDING UNDER 66 PA.C.S. § 1308(D) (RELATING TO
VOLUNTARY CHANGES IN RATES) IS PENDING AND WITHOUT REGARD TO
WHEN THE PROCEEDING WAS LAST CONCLUDED.
(B) IMPLEMENTATION.--THE IMPLEMENTATION TIMELINE ESTABLISHED
UNDER SECTION 2202(J) SHALL GOVERN THE COMMISSION'S ADJUSTMENT
OF CUSTOMER RATES TO REFLECT THE AUTHORIZED RETURN ON EQUITY
REQUIRED BY THIS ARTICLE.
(C) CONSTRUCTION.--NOTHING IN THIS SECTION SHALL BE
CONSTRUED TO REQUIRE THE INITIATION OF A RATE PROCEEDING UNDER
66 PA.C.S. § 1308(D) AS A PRECONDITION TO THE APPLICATION OF
THIS ARTICLE TO A COVERED UTILITY.
(D) DUTY TO SERVE.--NOTHING IN THIS ARTICLE RELIEVES A
COVERED UTILITY OF ITS OBLIGATION AND DUTY TO SERVE CUSTOMERS
THROUGH CONTINUED INVESTMENT IN MAINTAINING A RELIABLE
INFRASTRUCTURE THROUGH CONTINUED INVESTMENT AND UTILIZING A
QUALIFIED WORKFORCE TO DO SO.
ARTICLE XXII-A
SERVICE AND FACILITIES
SECTION 2201-A. DEFINITIONS.
THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ARTICLE
SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
CONTEXT CLEARLY INDICATES OTHERWISE:
"COMMISSION." THE PENNSYLVANIA PUBLIC UTILITY COMMISSION.
"PUBLIC UTILITY." AS DEFINED IN 66 PA.C.S. § 102 (RELATING
TO DEFINITIONS).
SECTION 2202-A. PREVIOUSLY UNBILLED SERVICE.
(A) UNBILLED SERVICE.--NOTWITHSTANDING 66 PA.C.S. § 1509
(RELATING TO BILLING PROCEDURES) AND EXCEPT AS PROVIDED IN
SUBSECTION (B), A PUBLIC UTILITY MAY NOT RENDER A BILL FOR
PREVIOUSLY UNBILLED SERVICE THAT HAS ACCRUED OUTSIDE OF THE
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PREVIOUS 12-MONTH PERIOD.
(B) APPLICABILITY.--SUBSECTION (A) DOES NOT APPLY TO A BILL
THAT IS DELAYED AS A RESULT OF:
(1) PROCEEDINGS OF THE COMMISSION OR A COURT OF
COMPETENT JURISDICTION; OR
(2) FRAUD, THEFT OR METER TAMPERING.
SECTION 15. ARTICLE XXIX-D OF THE ACT IS REPEALED:
[ARTICLE XXIX-D
COMPUTER DATA CENTER
EQUIPMENT INCENTIVE PROGRAM
SUBARTICLE A
PRELIMINARY PROVISIONS
SECTION 2901-D. DEFINITIONS.
THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ARTICLE
SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
CONTEXT CLEARLY INDICATES OTHERWISE:
"BLOCKCHAIN." A DISTRIBUTED LEDGER TECHNOLOGY IN WHICH THE
DATA IS:
(1) SHARED ACROSS A NETWORK THAT CREATES A DIGITAL
LEDGER OF VERIFIED TRANSACTIONS OR INFORMATION AMONG NETWORK
PARTICIPANTS; AND
(2) TYPICALLY LINKED USING CRYPTOGRAPHY TO MAINTAIN THE
INTEGRITY OF THE DIGITAL LEDGER AND EXECUTE OTHER FUNCTIONS,
INCLUDING THE TRANSFER OF OWNERSHIP OR VALUE.
"COMPUTER DATA CENTER." ALL OR PART OF A FACILITY THAT MAY
BE COMPOSED OF ONE OR MORE BUSINESSES, OWNERS OR TENANTS, THAT
IS OR WILL BE PREDOMINANTLY USED TO HOUSE WORKING SERVERS OR
SIMILAR DATA STORAGE SYSTEMS AND THAT MAY HAVE UNINTERRUPTIBLE
ENERGY SUPPLY OR GENERATOR BACKUP POWER, OR BOTH, COOLING
SYSTEMS, TOWERS AND OTHER TEMPERATURE CONTROL INFRASTRUCTURE.
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"COMPUTER DATA CENTER EQUIPMENT." EQUIPMENT THAT IS USED TO
OUTFIT, OPERATE OR BENEFIT A COMPUTER DATA CENTER AND COMPONENT
PARTS, INSTALLATIONS, REFRESHMENTS, REPLACEMENTS AND UPGRADES TO
THE EQUIPMENT, WHETHER ANY OF THE EQUIPMENT IS AFFIXED TO OR
INCORPORATED INTO REAL PROPERTY, INCLUDING:
(1) ALL EQUIPMENT NECESSARY FOR THE TRANSFORMATION,
GENERATION, DISTRIBUTION OR MANAGEMENT OF ELECTRICITY THAT IS
REQUIRED TO OPERATE COMPUTER SERVERS OR SIMILAR DATA STORAGE
EQUIPMENT, INCLUDING GENERATORS, UNINTERRUPTIBLE ENERGY
SUPPLIES, CONDUIT, GASEOUS FUEL PIPING, CABLING, DUCT BANKS,
SWITCHES, SWITCHBOARDS, BATTERIES AND TESTING EQUIPMENT.
(2) ALL EQUIPMENT NECESSARY TO COOL AND MAINTAIN A
CONTROLLED ENVIRONMENT FOR THE OPERATION OF THE COMPUTER
SERVERS OR DATA STORAGE SYSTEMS AND OTHER COMPONENTS OF THE
COMPUTER DATA CENTER, INCLUDING MECHANICAL EQUIPMENT,
REFRIGERANT PIPING, GASEOUS FUEL PIPING, ADIABATIC AND FREE
COOLING SYSTEMS, COOLING TOWERS, WATER SOFTENERS, AIR
HANDLING UNITS, INDOOR DIRECT EXCHANGE UNITS, FANS, DUCTING
AND FILTERS.
(3) ALL WATER CONSERVATION SYSTEMS, INCLUDING FACILITIES
OR MECHANISMS THAT ARE DESIGNED TO COLLECT, CONSERVE AND
REUSE WATER.
(4) ALL SOFTWARE, INCLUDING, BUT NOT LIMITED TO,
ENABLING SOFTWARE AND LICENSING AGREEMENTS, COMPUTER SERVERS
OR SIMILAR DATA STORAGE EQUIPMENT, CHASSIS, NETWORKING
EQUIPMENT, SWITCHES, RACKS, CABLING, TRAYS AND CONDUITS.
(5) ALL MONITORING EQUIPMENT AND SECURITY SYSTEMS.
(6) MODULAR DATA CENTERS AND PREASSEMBLED COMPONENTS OF
ANY ITEM DESCRIBED IN THIS DEFINITION, INCLUDING COMPONENTS
USED IN THE MANUFACTURING OF MODULAR DATA CENTERS.
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(7) OTHER TANGIBLE PERSONAL PROPERTY THAT IS ESSENTIAL
TO THE OPERATIONS OF A COMPUTER DATA CENTER.
"DEPARTMENT." THE DEPARTMENT OF REVENUE OF THE COMMONWEALTH.
"FACILITY." ONE OR MORE PARCELS OF LAND IN THIS COMMONWEALTH
AND ANY STRUCTURES AND PERSONAL PROPERTY CONTAINED ON THE LAND.
"NEW INVESTMENT." CONSTRUCTION, EXPANSION OR BUILD OUT OF
DATA CENTER SPACE AT EITHER A NEW OR AN EXISTING COMPUTER DATA
CENTER ON OR AFTER JANUARY 1, 2014, AND THE PURCHASE AND
INSTALLATION OF COMPUTER DATA CENTER EQUIPMENT, EXCEPT FOR ITEMS
DESCRIBED UNDER PARAGRAPH (4) OF THE DEFINITION OF "COMPUTER
DATA CENTER EQUIPMENT."
"OWNER OR OPERATOR." INCLUDES A SINGLE ENTITY, MULTIPLE
ENTITIES OR AFFILIATED ENTITIES.
"PROOF OF WORK CRYPTO-ASSET MINING." THE PROCESS OF
PERFORMING COMPUTATIONS TO ADD A VALID BLOCK OF DATA TO A
BLOCKCHAIN, EXCLUDING COMPUTATIONS REQUIRED TO VALIDATE
INDIVIDUAL TRANSACTIONS, TYPICALLY IN EXCHANGE FOR A REWARD OR
FEE.
"QUALIFICATION PERIOD." EXCEPT AS PROVIDED UNDER SECTIONS
2931-D(D), 2935-D(B) AND 2937-D(C), AS FOLLOWS:
(1) WITH RESPECT TO THE OWNER OR OPERATOR OF A COMPUTER
DATA CENTER CERTIFIED UNDER THIS ARTICLE, A PERIOD OF TIME
BEGINNING ON THE DATE OF CERTIFICATION OF THE COMPUTER DATA
CENTER AND EXPIRING AT THE END OF THE FIFTEENTH FULL CALENDAR
YEAR FOLLOWING THE CALENDAR YEAR IN WHICH THE OWNER OR
OPERATOR FILED AN APPLICATION FOR CERTIFICATION.
(2) WITH RESPECT TO A QUALIFIED TENANT OF THE OWNER OR
OPERATOR OF A COMPUTER DATA CENTER CERTIFIED UNDER THIS
ARTICLE, A PERIOD OF TIME BEGINNING ON THE DATE THAT THE
QUALIFIED TENANT ENTERS INTO AN AGREEMENT CONCERNING THE USE
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OR OCCUPANCY OF THE COMPUTER DATA CENTER AND EXPIRING AT THE
EARLIER OF THE EXPIRATION OF THE TERM OF THE AGREEMENT OR THE
END OF THE 10TH FULL CALENDAR YEAR FOLLOWING THE CALENDAR
YEAR IN WHICH THE QUALIFIED TENANT ENTERS INTO THE AGREEMENT.
"QUALIFIED TENANT." AN ENTITY THAT CONTRACTS WITH THE OWNER
OR OPERATOR OF A COMPUTER DATA CENTER THAT IS CERTIFIED PURSUANT
TO THIS ARTICLE TO USE OR OCCUPY PART OF THE COMPUTER DATA
CENTER FOR AT LEAST 100 KILOWATTS PER MONTH FOR TWO OR MORE
YEARS.
"TAX EXEMPTION." THE TAX EXEMPTION PROVIDED UNDER SUBARTICLE
C.
"TAX REFUND." THE TAX REFUND PROVIDED FOR UNDER SUBARTICLE
B.
"TELECOMMUNICATIONS PROVIDER." A PROVIDER OF
TELECOMMUNICATIONS SERVICES AS DEFINED IN 61 PA. CODE § 60.20
(RELATING TO TELECOMMUNICATIONS SERVICE).
"TENANT." AN ENTITY THAT CONTRACTS WITH THE OWNER OR
OPERATOR OF A COMPUTER DATA CENTER TO USE OR OCCUPY PART OF THE
COMPUTER DATA CENTER.
SUBARTICLE B
SALES AND USE TAX REFUND PROGRAM
SECTION 2911-D. SALES AND USE TAX REFUND.
(A) APPLICATION.--BEGINNING JULY 1, 2017, AN OWNER OR
OPERATOR OR QUALIFIED TENANT OF A COMPUTER DATA CENTER CERTIFIED
UNDER THIS ARTICLE MAY APPLY FOR A TAX REFUND OF TAXES PAID
UNDER ARTICLE II UPON THE SALE AT RETAIL OR USE OF COMPUTER DATA
CENTER EQUIPMENT FOR INSTALLATION IN A COMPUTER DATA CENTER,
PURCHASED BY:
(1) AN OWNER OR OPERATOR OF A COMPUTER DATA CENTER
CERTIFIED UNDER THIS ARTICLE.
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(2) A QUALIFIED TENANT CERTIFIED UNDER THIS ARTICLE.
(B) APPLICABILITY.--TAXES PAID UNDER ARTICLE II DURING THE
QUALIFICATION PERIOD SHALL BE ELIGIBLE FOR A REFUND UNDER THIS
ARTICLE.
(C) EXCLUSIONS.--THE FOLLOWING DO NOT QUALIFY FOR A TAX
REFUND:
(1) COMPUTER DATA CENTER EQUIPMENT USED BY THE COMPUTER
DATA CENTER TO:
(I) GENERATE ELECTRICITY FOR RESALE PURPOSES TO A
POWER UTILITY, EXCEPT FOR SALES INCIDENTAL TO THE PRIMARY
SALE TO COMPUTER DATA CENTERS AND WHICH QUALIFY UNDER
SUBPARAGRAPH (II); OR
(II) GENERATE, PROVIDE OR SELL MORE THAN 5% OF ITS
ELECTRICITY OUTSIDE OF THE COMPUTER DATA CENTER.
(2) (RESERVED).
SECTION 2912-D. APPLICATION FOR CERTIFICATION.
TO BE CONSIDERED FOR A CERTIFICATION, AN OWNER OR OPERATOR OF
A COMPUTER DATA CENTER SHALL SUBMIT TO THE DEPARTMENT AN
APPLICATION ON A FORM PRESCRIBED BY THE DEPARTMENT THAT INCLUDES
THE FOLLOWING:
(1) THE OWNER'S OR OPERATOR'S NAME, ADDRESS AND
TELEPHONE NUMBER.
(2) THE ADDRESS OF THE SITE WHERE THE FACILITY IS OR
WILL BE LOCATED, INCLUDING, IF APPLICABLE, INFORMATION
SUFFICIENT TO IDENTIFY THE SPECIFIC PORTION OR PORTIONS OF
THE FACILITY COMPRISING THE COMPUTER DATA CENTER.
(3) IF THE COMPUTER DATA CENTER IS TO QUALIFY UNDER
SECTION 2915-D(1), THE FOLLOWING INFORMATION:
(I) THE ANTICIPATED INVESTMENT ASSOCIATED WITH THE
COMPUTER DATA CENTER FOR WHICH THE CERTIFICATION IS BEING
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SOUGHT.
(II) AN AFFIRMATION, SIGNED BY AN AUTHORIZED
EXECUTIVE REPRESENTING THE OWNER OR OPERATOR, THAT THE
COMPUTER DATA CENTER IS EXPECTED TO SATISFY THE
CERTIFICATION REQUIREMENTS PRESCRIBED IN SECTION 2915-
D(1).
(4) IF THE COMPUTER DATA CENTER IS TO QUALIFY UNDER
SECTION 2915-D(2), AN AFFIRMATION, SIGNED BY AN AUTHORIZED
EXECUTIVE REPRESENTING THE OWNER OR OPERATOR, THAT THE
COMPUTER DATA CENTER HAS SATISFIED, OR WILL SATISFY, THE
CERTIFICATION REQUIREMENTS PRESCRIBED IN SECTION 2915-D(2).
(5) THE DEPARTMENT SHALL BEGIN ACCEPTING APPLICATIONS NO
LATER THAN 90 DAYS AFTER THE EFFECTIVE DATE OF THIS SECTION.
SECTION 2913-D. REVIEW OF APPLICATION.
(A) GENERAL RULE.--WITHIN 60 DAYS AFTER RECEIVING A COMPLETE
AND CORRECT APPLICATION, THE DEPARTMENT SHALL REVIEW THE
APPLICATION AND EITHER ISSUE A WRITTEN CERTIFICATION THAT THE
COMPUTER DATA CENTER QUALIFIES FOR THE CERTIFICATION OR PROVIDE
WRITTEN REASONS FOR ITS DENIAL.
(B) DEEMED APPROVAL.--FAILURE OF THE DEPARTMENT TO APPROVE
OR DENY AN APPLICATION WITHIN 60 DAYS AFTER THE DATE THE OWNER
OR OPERATOR OF A COMPUTER DATA CENTER SUBMITS THE APPLICATION TO
THE DEPARTMENT CONSTITUTES CERTIFICATION OF THE COMPUTER DATA
CENTER, AND THE DEPARTMENT SHALL ISSUE WRITTEN CERTIFICATION TO
THE OWNER OR OPERATOR WITHIN 14 DAYS. THE DEPARTMENT MAY NOT
CERTIFY ANY COMPUTER DATA CENTER AFTER DECEMBER 31, 2021.
SECTION 2914-D. SEPARATION OF FACILITIES.
(A) SEPARATE CERTIFICATION.--AN OWNER OR OPERATOR OF A
COMPUTER DATA CENTER MAY SEPARATE A FACILITY INTO ONE OR MORE
COMPUTER DATA CENTERS, WHICH MAY EACH RECEIVE A SEPARATE
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CERTIFICATION, IF EACH COMPUTER DATA CENTER INDIVIDUALLY MEETS
THE REQUIREMENTS PRESCRIBED IN SECTION 2915-D.
(B) LIMITATION.--A PORTION OF A FACILITY OR AN ARTICLE OF
COMPUTER DATA EQUIPMENT SHALL NOT BE DEEMED TO BE A PART OF MORE
THAN ONE COMPUTER DATA CENTER.
(C) AGGREGATION.--AN OWNER OR OPERATOR MAY AGGREGATE ONE OR
MORE PARCELS, BUILDINGS OR CONDOMINIUMS IN A FACILITY INTO A
SINGLE COMPUTER DATA CENTER IF, IN THE AGGREGATE, THE PARCELS,
BUILDINGS AND CONDOMINIUMS MEET THE REQUIREMENTS OF THIS
ARTICLE.
SECTION 2915-D. ELIGIBILITY REQUIREMENTS.
A COMPUTER DATA CENTER MUST MEET ONE OF THE FOLLOWING
REQUIREMENTS, AFTER TAKING INTO ACCOUNT THE COMBINED INVESTMENTS
MADE AND ANNUAL COMPENSATION PAID BY THE OWNER OR OPERATOR OF
THE COMPUTER DATA CENTER OR THE QUALIFIED TENANT:
(1) ON OR BEFORE THE FOURTH ANNIVERSARY OF
CERTIFICATION, THE COMPUTER DATA CENTER CREATES A MINIMUM
INVESTMENT OF:
(I) AT LEAST $25,000,000 OF NEW INVESTMENT IF THE
COMPUTER DATA CENTER IS LOCATED IN A COUNTY WITH A
POPULATION OF 250,000 OR FEWER INDIVIDUALS; OR
(II) AT LEAST $50,000,000 OF NEW INVESTMENT IF THE
COMPUTER DATA CENTER IS LOCATED IN A COUNTY WITH A
POPULATION OF MORE THAN 250,000 INDIVIDUALS.
(2) ONE OR MORE TAXPAYERS OPERATING OR OCCUPYING A
COMPUTER DATA CENTER, IN THE AGGREGATE, PAY ANNUAL
COMPENSATION OF AT LEAST $1,000,000 TO EMPLOYEES AT THE
CERTIFIED COMPUTER DATA CENTER SITE FOR EACH YEAR OF THE
CERTIFICATION AFTER THE FOURTH ANNIVERSARY OF CERTIFICATION.
SECTION 2916-D. NOTIFICATION.
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(A) REQUIREMENTS SATISFIED.--ON OR BEFORE THE FOURTH
ANNIVERSARY OF THE CERTIFICATION OF A COMPUTER DATA CENTER, THE
OWNER OR OPERATOR OF A COMPUTER DATA CENTER SHALL NOTIFY THE
DEPARTMENT IN WRITING WHETHER THE COMPUTER DATA CENTER FOR WHICH
THE CERTIFICATION IS REQUESTED HAS SATISFIED THE REQUIREMENTS
PRESCRIBED IN SECTION 2915-D.
(B) RECORDS.--UNTIL A COMPUTER DATA CENTER SATISFIES THE
REQUIREMENTS PRESCRIBED IN SECTION 2915-D, THE OWNER, OPERATOR
AND QUALIFIED TENANTS SHALL MAINTAIN DETAILED RECORDS OF ALL
INVESTMENTS CREATED BY THE COMPUTER DATA CENTER, INCLUDING COSTS
OF BUILDINGS AND COMPUTER DATA CENTER EQUIPMENT, AND ALL TAX
REFUNDS DIRECTLY RECEIVED BY THE OWNER, OPERATOR OR QUALIFIED
TENANT.
SECTION 2917-D. REVOCATION OF CERTIFICATION.
(A) REVOCATION.--IF THE DEPARTMENT DETERMINES THAT THE
REQUIREMENTS OF SECTION 2915-D HAVE NOT BEEN SATISFIED, THE
DEPARTMENT MAY REVOKE THE CERTIFICATION OF A COMPUTER DATA
CENTER.
(B) APPEAL.--THE OWNER OR OPERATOR OF THE COMPUTER DATA
CENTER MAY APPEAL THE REVOCATION. APPEALS FILED UNDER THIS
SECTION SHALL BE GOVERNED BY ARTICLE II.
(C) RECAPTURE.--IF CERTIFICATION IS REVOKED PURSUANT TO THIS
SECTION, THE QUALIFICATION PERIOD OF ANY OWNER, OPERATOR OR
QUALIFIED TENANT OF THE COMPUTER DATA CENTER EXPIRES, AND THE
DEPARTMENT MAY RECAPTURE FROM THE OWNER, OPERATOR OR QUALIFIED
TENANT ALL OR PART OF THE TAX REFUND PROVIDED DIRECTLY TO THE
OWNER OR OPERATOR OR QUALIFIED TENANT. THE DEPARTMENT MAY GIVE
SPECIAL CONSIDERATION OR ALLOW A TEMPORARY EXEMPTION FROM
RECAPTURE OF THE TAX REFUND IF THERE IS EXTRAORDINARY HARDSHIP
DUE TO FACTORS BEYOND THE CONTROL OF THE OWNER OR OPERATOR OR
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QUALIFIED TENANT.
SECTION 2918-D. GUIDELINES.
THE DEPARTMENT SHALL PUBLISH GUIDELINES AND PRESCRIBE FORMS
AND PROCEDURES AS NECESSARY FOR THE PURPOSES OF THIS ARTICLE.
SECTION 2919-D. CONFIDENTIAL INFORMATION.
PROPRIETARY BUSINESS INFORMATION CONTAINED IN THE APPLICATION
FORM DESCRIBED IN SECTION 2912-D AND THE WRITTEN NOTICE
DESCRIBED IN SECTION 2916-D, AS WELL AS INFORMATION CONCERNING
THE IDENTITY OF A QUALIFIED TENANT, ARE CONFIDENTIAL AND MAY NOT
BE DISCLOSED TO THE PUBLIC. THE DEPARTMENT MAY DISCLOSE THE NAME
OF A COMPUTER DATA CENTER THAT HAS BEEN CERTIFIED UNDER THIS
ARTICLE.
SECTION 2920-D. LIST OF TENANTS.
AN OWNER OR OPERATOR OF A COMPUTER DATA CENTER SHALL PROVIDE,
TO THE EXTENT PERMISSIBLE UNDER FEDERAL LAW, THE DEPARTMENT WITH
A LIST OF QUALIFIED TENANTS, INCLUDING THE COMMENCEMENT AND
EXPIRATION DATES OF EACH QUALIFIED TENANT'S AGREEMENT TO USE OR
OCCUPY PART OF THE COMPUTER DATA CENTER. THE LIST SHALL BE
PROVIDED TO THE DEPARTMENT ANNUALLY, UPON REQUEST BY THE
DEPARTMENT.
SECTION 2921-D. SALE OR TRANSFER.
EXCEPT AS PROVIDED IN SECTION 2917-D, A COMPUTER DATA CENTER
RETAINS ITS CERTIFICATION REGARDLESS OF A TRANSFER, SALE OR
OTHER DISPOSITION, DIRECTLY OR INDIRECTLY, OF THE COMPUTER DATA
CENTER.
SECTION 2922-D. APPLICATION.
(A) GENERAL RULE.--AN OWNER, OPERATOR OR QUALIFIED TENANT
MAY APPLY FOR A TAX REFUND UNDER THIS ARTICLE ON OR BEFORE JULY
30, 2017, AND EACH JULY 30 THEREAFTER.
(B) NOTIFICATION.--NO LATER THAN SEPTEMBER 30, 2017, AND
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EACH SEPTEMBER 30 THEREAFTER, THE DEPARTMENT SHALL NOTIFY EACH
APPLICANT OF THE AMOUNT OF TAX REFUND APPROVED BY THE
DEPARTMENT.
SECTION 2923-D. LIMITATIONS.
(A) TOTAL.--THE TOTAL AMOUNT OF STATE TAX REFUNDS APPROVED
BY THE DEPARTMENT UNDER THIS ARTICLE SHALL NOT EXCEED $7,000,000
IN ANY FISCAL YEAR.
(B) ALLOCATION.--IF THE TOTAL AMOUNT OF TAX REFUNDS APPROVED
FOR ALL APPLICANTS EXCEEDS THE LIMITATION ON THE AMOUNT OF TAX
REFUNDS IN SUBSECTION (A) IN A FISCAL YEAR, THE TAX REFUND TO BE
RECEIVED BY EACH APPLICANT SHALL BE DETERMINED AS FOLLOWS:
(1) DIVIDE:
(I) THE TAX REFUND APPROVED FOR THE APPLICANT; BY
(II) THE TOTAL OF ALL TAX REFUNDS APPROVED FOR ALL
APPLICANTS.
(2) MULTIPLY:
(I) THE AMOUNT UNDER SUBSECTION (A); BY
(II) THE QUOTIENT UNDER PARAGRAPH (1).
(3) THE ALGEBRAIC FORM OF THE CALCULATION UNDER THIS
SUBSECTION IS:
TAXPAYER'S TAX REFUND = AMOUNT ALLOCATED FOR THOSE
TAX REFUNDS X (TAX REFUND APPROVED FOR THE
APPLICANT/TOTAL OF ALL TAX REFUNDS APPROVED FOR ALL
APPLICANTS).
SECTION 2924-D. APPLICABILITY.
NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE, THE
DEPARTMENT MAY NOT ISSUE A TAX REFUND UNDER THIS SUBARTICLE FOR
THE TAX IMPOSED UPON THE SALE AT RETAIL OR USE OF COMPUTER DATA
CENTER EQUIPMENT PURCHASED AFTER DECEMBER 31, 2021.
SUBARTICLE C
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SALES AND USE TAX EXEMPTION PROGRAM
SECTION 2931-D. SALES AND USE TAX EXEMPTION.
(A) SALES AND USE TAX.--BEGINNING JANUARY 1, 2022, THE TAX
IMPOSED UNDER ARTICLE II SHALL NOT BE IMPOSED UPON THE SALE AT
RETAIL OR USE OF COMPUTER DATA CENTER EQUIPMENT PURCHASED FOR
INSTALLATION IN A CERTIFIED COMPUTER DATA CENTER, IF PURCHASED
BY ANY OF THE FOLLOWING:
(1) AN OWNER OR OPERATOR OF A COMPUTER DATA CENTER
CERTIFIED UNDER THIS SUBARTICLE.
(2) A QUALIFIED TENANT OF A COMPUTER DATA CENTER
CERTIFIED UNDER THIS SUBARTICLE.
(B) APPLICABILITY.--A TAX EXEMPTION APPROVED UNDER THIS
SUBARTICLE SHALL APPLY DURING THE QUALIFICATION PERIOD AS
PROVIDED UNDER SECTION 2942-D.
(C) EXCLUSIONS.--THE FOLLOWING SHALL NOT QUALIFY FOR A TAX
EXEMPTION:
(1) A TELECOMMUNICATIONS PROVIDER'S COMPUTER DATA CENTER
THAT DOES NOT HAVE RETAIL OR WHOLESALE CUSTOMERS BEING BILLED
OR PAYING FOR SERVICES AND DOES PROVIDE A MAJORITY OF
SERVICES FOR INTERNAL USE OR USE BY THE TELECOMMUNICATIONS
PROVIDER'S SUBSIDIARIES.
(2) COMPUTER DATA CENTER EQUIPMENT USED BY THE CERTIFIED
COMPUTER DATA CENTER FOR ANY OF THE FOLLOWING PURPOSES:
(I) GENERATING ELECTRICITY FOR RESALE PURPOSES TO A
POWER UTILITY.
(II) GENERATING, PROVIDING OR SELLING MORE THAN 5%
OF ITS ELECTRICITY OUTSIDE OF THE CERTIFIED COMPUTER DATA
CENTER.
(III) PROOF OF WORK CRYPTO-ASSET MINING.
(3) LAPTOP COMPUTERS, HANDHELD DEVICES AND MOTOR
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VEHICLES FOR USE BOTH INSIDE AND OUTSIDE THE COMPUTER DATA
CENTER.
(D) DEFINITION.--AS USED IN THIS SECTION, THE TERM
"QUALIFICATION PERIOD" SHALL MEAN THE FOLLOWING:
(1) WITH RESPECT TO THE OWNER OR OPERATOR OF A COMPUTER
DATA CENTER CERTIFIED UNDER THIS ARTICLE, A PERIOD OF TIME
BEGINNING ON THE DATE OF CERTIFICATION OF THE COMPUTER DATA
CENTER AND EXPIRING AT THE END OF THE 25TH FULL CALENDAR YEAR
FOLLOWING THE CALENDAR YEAR IN WHICH THE OWNER OR OPERATOR
FILED AN APPLICATION FOR CERTIFICATION.
(2) WITH RESPECT TO A QUALIFIED TENANT OF THE OWNER OR
OPERATOR OF A COMPUTER DATA CENTER CERTIFIED UNDER THIS
ARTICLE, A PERIOD OF TIME BEGINNING ON THE DATE THAT THE
QUALIFIED TENANT ENTERS INTO AN AGREEMENT CONCERNING THE USE
OR OCCUPANCY OF THE COMPUTER DATA CENTER AND EXPIRING AT THE
EARLIER OF THE EXPIRATION OF THE TERM OF THE AGREEMENT OR THE
END OF THE 10TH FULL CALENDAR YEAR FOLLOWING THE CALENDAR
YEAR IN WHICH THE QUALIFIED TENANT ENTERS INTO THE AGREEMENT.
SECTION 2932-D. APPLICATION FOR CERTIFICATION.
(A) APPLICATION.--TO BE CONSIDERED FOR A CERTIFICATION, AN
OWNER OR OPERATOR OF A COMPUTER DATA CENTER SHALL SUBMIT TO THE
DEPARTMENT AN APPLICATION ON A FORM PRESCRIBED BY THE DEPARTMENT
THAT INCLUDES ALL OF THE FOLLOWING:
(1) THE OWNER'S OR OPERATOR'S NAME, ADDRESS AND
TELEPHONE NUMBER.
(2) THE ADDRESS OF THE SITE WHERE THE COMPUTER DATA
CENTER IS OR WILL BE LOCATED, INCLUDING, IF APPLICABLE,
INFORMATION SUFFICIENT TO IDENTIFY THE SPECIFIC PORTION OF A
FACILITY COMPRISING THE COMPUTER DATA CENTER.
(3) AN AFFIRMATION, SIGNED BY AN AUTHORIZED EXECUTIVE
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REPRESENTING THE OWNER OR OPERATOR, THAT THE COMPUTER DATA
CENTER IS EXPECTED TO SATISFY THE CERTIFICATION REQUIREMENTS
PRESCRIBED UNDER SECTION 2935-D.
(B) ACCEPTANCE.--THE DEPARTMENT SHALL BEGIN ACCEPTING
APPLICATIONS NO LATER THAN 60 DAYS AFTER THE EFFECTIVE DATE OF
THIS SECTION.
(C) COMPLIANCE IN REPORTING.--AN OWNER OR OPERATOR OR
QUALIFIED TENANT ELIGIBLE FOR A CERTIFICATION SHALL COMPLY WITH
ALL REPORTING, FILING AND COMPLIANCE REQUIREMENTS UNDER THIS
ACT.
(D) COMPLIANCE IN TAX LAWS.--NO OWNER OR OPERATOR OR
QUALIFIED TENANT MAY RECEIVE A CERTIFICATION UNDER THIS
SUBARTICLE UNLESS THAT OWNER OR OPERATOR OR QUALIFIED TENANT IS
IN FULL COMPLIANCE WITH ALL STATE TAX LAWS.
SECTION 2933-D. REVIEW OF APPLICATION.
(A) GENERAL RULE.--WITHIN 60 DAYS AFTER RECEIVING A COMPLETE
AND CORRECT APPLICATION, THE DEPARTMENT SHALL REVIEW THE
APPLICATION AND EITHER ISSUE A WRITTEN CERTIFICATION THAT THE
COMPUTER DATA CENTER QUALIFIES FOR THE CERTIFICATION OR PROVIDE
WRITTEN REASONS FOR ITS DENIAL.
(B) DEEMED APPROVAL.--FAILURE OF THE DEPARTMENT TO APPROVE
OR DENY AN APPLICATION THAT HAS BEEN ACKNOWLEDGED AS RECEIVED BY
THE DEPARTMENT WITHIN 60 DAYS AFTER THE DATE THE OWNER OR
OPERATOR OF A COMPUTER DATA CENTER SUBMITS THE APPLICATION TO
THE DEPARTMENT SHALL CONSTITUTE CERTIFICATION OF THE COMPUTER
DATA CENTER, AND THE DEPARTMENT SHALL ISSUE WRITTEN
CERTIFICATION TO THE OWNER OR OPERATOR WITHIN 14 DAYS.
SECTION 2934-D. SEPARATION OF FACILITIES.
(A) SEPARATE CERTIFICATION.--AN OWNER OR OPERATOR OF A
COMPUTER DATA CENTER MAY SEPARATE A FACILITY INTO ONE OR MORE
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COMPUTER DATA CENTERS, WHICH MAY EACH RECEIVE A SEPARATE
CERTIFICATION, IF EACH COMPUTER DATA CENTER INDIVIDUALLY MEETS
THE REQUIREMENTS PRESCRIBED IN SECTION 2935-D.
(B) LIMITATION.--A PORTION OF A FACILITY OR AN ARTICLE OF
COMPUTER DATA EQUIPMENT SHALL NOT BE DEEMED TO BE A PART OF MORE
THAN ONE COMPUTER DATA CENTER FOR CERTIFICATION UNDER THIS
SUBARTICLE.
(C) AGGREGATION.--AN OWNER OR OPERATOR MAY AGGREGATE ONE OR
MORE PARCELS, BUILDINGS OR CONDOMINIUMS IN A FACILITY INTO A
SINGLE COMPUTER DATA CENTER FOR CERTIFICATION UNDER THIS
SUBARTICLE IF, IN THE AGGREGATE, THE PARCELS, BUILDINGS AND
CONDOMINIUMS MEET THE REQUIREMENTS PRESCRIBED IN SECTION 2935-D.
SECTION 2935-D. ELIGIBILITY REQUIREMENTS.
(A) GENERAL RULE.--IN ORDER TO BE CERTIFIED UNDER THIS
SUBARTICLE, AN OWNER OR OPERATOR OF A COMPUTER DATA CENTER MUST
MEET ALL OF THE FOLLOWING REQUIREMENTS:
(1) ON OR BEFORE THE FOURTH ANNIVERSARY OF
CERTIFICATION, THE COMBINED INVESTMENT, IN THE AGGREGATE, OF
THE OWNER OR OPERATOR OR QUALIFIED TENANT OF THE COMPUTER
DATA CENTER MUST TOTAL A MINIMUM OF ANY OF THE FOLLOWING:
(I) AT LEAST $75,000,000 OF NEW INVESTMENT IF THE
COMPUTER DATA CENTER IS LOCATED IN A COUNTY WITH A
POPULATION OF 250,000 OR FEWER INDIVIDUALS AND CREATES 25
NEW JOBS.
(II) AT LEAST $100,000,000 OF NEW INVESTMENT IF THE
COMPUTER DATA CENTER IS LOCATED IN A COUNTY WITH A
POPULATION OF MORE THAN 250,000 INDIVIDUALS AND CREATES
45 NEW JOBS.
(2) ON OR BEFORE THE FOURTH ANNIVERSARY OF
CERTIFICATION, THE OWNER OR OPERATOR OR QUALIFIED TENANT OF A
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COMPUTER DATA CENTER, IN THE AGGREGATE, MUST PAY ANNUAL
COMPENSATION OF AT LEAST $1,000,000 TO EMPLOYEES AT THE
CERTIFIED COMPUTER DATA CENTER SITE FOR EACH YEAR OF THE
CERTIFICATION AFTER THE FOURTH ANNIVERSARY OF CERTIFICATION.
(B) PRIOR APPLICATIONS.--A COMPUTER DATA CENTER THAT HAS MET
THE ELIGIBILITY REQUIREMENTS AS PRESCRIBED UNDER SECTION 2915-D
AND HAS, PRIOR TO JULY 1, 2021, BEEN CERTIFIED UNDER SECTION
2913-D SHALL BE DEEMED TO MEET THE CERTIFICATION REQUIREMENTS OF
THIS SECTION. THE CERTIFICATION SHALL NOT BE REVOKED, EXCEPT AS
PROVIDED UNDER SECTION 2917-D, AND SHALL REMAIN IN EFFECT FOR
THE REMAINDER OF THE QUALIFICATION PERIOD, AS DEFINED IN SECTION
2931-D(D).
(C) LIMITATION.--THE DEPARTMENT MAY NOT CERTIFY ANY COMPUTER
DATA CENTER UNDER THIS SUBARTICLE AFTER DECEMBER 31, 2032.
(D) DEFINITION.--AS USED IN THIS SECTION, THE TERM "NEW
INVESTMENT" MEANS CONSTRUCTION, EXPANSION OR BUILD OUT OF DATA
CENTER SPACE AT EITHER A NEW OR AN EXISTING COMPUTER DATA CENTER
ON OR AFTER JANUARY 1, 2022, AND THE PURCHASE AND INSTALLATION
OF COMPUTER DATA CENTER EQUIPMENT, EXCEPT FOR ITEMS DESCRIBED
UNDER PARAGRAPH (4) OF THE DEFINITION OF "COMPUTER DATA CENTER
EQUIPMENT" IN SECTION 2901-D.
SECTION 2936-D. NOTIFICATION AND RECORDS.
(A) REQUIREMENTS SATISFIED.--ON OR BEFORE THE FOURTH
ANNIVERSARY OF THE CERTIFICATION OF A COMPUTER DATA CENTER, THE
OWNER OR OPERATOR OF THE COMPUTER DATA CENTER SHALL NOTIFY THE
DEPARTMENT IN WRITING WHETHER THE COMPUTER DATA CENTER FOR WHICH
THE CERTIFICATION IS REQUESTED HAS SATISFIED THE REQUIREMENTS
PRESCRIBED UNDER SECTION 2935-D.
(B) RECORDS.--THE OWNER OR OPERATOR OR QUALIFIED TENANT
SHALL:
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(1) MAINTAIN DETAILED RECORDS OF ALL INVESTMENTS CREATED
BY THE COMPUTER DATA CENTER, INCLUDING COSTS OF BUILDINGS AND
COMPUTER DATA CENTER EQUIPMENT AND ALL TAX EXEMPTIONS
RECEIVED BY THE OWNER OR OPERATOR OR QUALIFIED TENANT.
(2) MAINTAIN PURCHASE JOURNALS FOR EXAMINATION BY THE
DEPARTMENT.
SECTION 2937-D. REVOCATION OF CERTIFICATION.
(A) REVOCATION.--IF THE DEPARTMENT DETERMINES THAT THE
REQUIREMENTS OF SECTION 2935-D HAVE NOT BEEN SATISFIED, THE
DEPARTMENT MAY REVOKE THE CERTIFICATION OF A COMPUTER DATA
CENTER.
(B) APPEAL.--THE OWNER OR OPERATOR OF THE COMPUTER DATA
CENTER MAY APPEAL THE REVOCATION. APPEALS FILED UNDER THIS
SECTION SHALL BE GOVERNED BY ARTICLE II.
(C) RECAPTURE.--IF CERTIFICATION IS REVOKED UNDER THIS
SECTION, THE QUALIFICATION PERIOD, AS DEFINED IN SECTION 2931-
D(D), OF ANY OWNER OR OPERATOR OR QUALIFIED TENANT OF THE
COMPUTER DATA CENTER SHALL EXPIRE AND THE DEPARTMENT MAY
RECAPTURE FROM THE OWNER OR OPERATOR OR QUALIFIED TENANT ALL OR
PART OF THE TAX EXEMPTION RECEIVED BY THE OWNER OR OPERATOR OR
QUALIFIED TENANT UNDER SECTION 2942-D. THE DEPARTMENT MAY GIVE
SPECIAL CONSIDERATION OR ALLOW A TEMPORARY EXEMPTION FROM
RECAPTURE OF THE TAX EXEMPTION IF THERE IS EXTRAORDINARY
HARDSHIP DUE TO FACTORS BEYOND THE CONTROL OF THE OWNER OR
OPERATOR OR QUALIFIED TENANT. THE DEPARTMENT MAY REQUIRE THE
OWNER OR OPERATOR OR QUALIFIED TENANT TO FILE APPROPRIATE
AMENDED TAX RETURNS IN ORDER TO REFLECT ANY RECAPTURE OF THE TAX
EXEMPTION.
(D) LIMITATION ON ASSESSMENT.--NOTWITHSTANDING THE
LIMITATION ON ASSESSMENT AND COLLECTION IN SECTION 258, THE
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DEPARTMENT SHALL ASSESS ANY TAX DETERMINED NOT TO BE PROPERLY
EXEMPTED UNDER THIS SUBARTICLE WITHIN FIVE YEARS FROM THE DATE
AN OWNER OR OPERATOR OR QUALIFIED TENANT OF A COMPUTER DATA
CENTER PURCHASES PROPERTY EXEMPT FROM A TAX. A TAXPAYER MAY
CONSENT TO AN EXTENSION OF THE PERIOD AS SET FORTH IN SECTION
261.
SECTION 2938-D. GUIDELINES.
THE DEPARTMENT SHALL PUBLISH GUIDELINES AND PRESCRIBE FORMS
AND PROCEDURES AS NECESSARY FOR THE PURPOSES OF THIS ARTICLE.
SECTION 2939-D. CONFIDENTIAL INFORMATION.
PROPRIETARY BUSINESS INFORMATION CONTAINED IN THE APPLICATION
FORM DESCRIBED UNDER SECTION 2932-D AND THE WRITTEN NOTICE
DESCRIBED UNDER SECTION 2936-D, AS WELL AS INFORMATION
CONCERNING THE IDENTITY OF A QUALIFIED TENANT, SHALL BE
CONFIDENTIAL AND MAY NOT BE DISCLOSED TO THE PUBLIC. THE
DEPARTMENT MAY DISCLOSE THE NAME OF A COMPUTER DATA CENTER THAT
HAS BEEN CERTIFIED UNDER THIS SUBARTICLE.
SECTION 2940-D. LIST OF TENANTS.
AN OWNER OR OPERATOR OF A CERTIFIED COMPUTER DATA CENTER
SHALL PROVIDE, TO THE EXTENT PERMISSIBLE UNDER FEDERAL LAW, THE
DEPARTMENT WITH A LIST OF QUALIFIED TENANTS, INCLUDING THE
COMMENCEMENT AND EXPIRATION DATES OF EACH QUALIFIED TENANT'S
AGREEMENT TO USE OR OCCUPY PART OF THE CERTIFIED COMPUTER DATA
CENTER. THE LIST SHALL BE PROVIDED TO THE DEPARTMENT ANNUALLY,
UPON REQUEST BY THE DEPARTMENT.
SECTION 2941-D. SALE OR TRANSFER.
EXCEPT AS PROVIDED UNDER SECTION 2937-D, A COMPUTER DATA
CENTER RETAINS ITS CERTIFICATION REGARDLESS OF A TRANSFER, SALE
OR OTHER DISPOSITION, DIRECTLY OR INDIRECTLY, OF THE COMPUTER
DATA CENTER.
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SECTION 2942-D. CERTIFICATE OF EXEMPTION.
(A) GENERAL RULE.--A QUALIFIED OWNER OR OPERATOR OR
QUALIFIED TENANT OF A COMPUTER DATA CENTER CERTIFIED UNDER THIS
SUBARTICLE MAY SUBMIT FOR A SALES AND USE TAX CERTIFICATE OF
EXEMPTION IN A MANNER PRESCRIBED BY THE DEPARTMENT ON OR BEFORE
OCTOBER 1, 2021, AND RENEW EACH OCTOBER 1 THEREAFTER. THE
FOLLOWING SHALL APPLY:
(1) THE OWNER OR OPERATOR OR QUALIFIED TENANT OF A
CERTIFIED COMPUTER DATA CENTER ELIGIBLE FOR A SALES AND USE
TAX CERTIFICATE OF EXEMPTION SHALL COMPLY WITH ALL REPORTING,
FILING AND COMPLIANCE REQUIREMENTS UNDER THIS ACT.
(2) NO OWNER OR OPERATOR OR QUALIFIED TENANT MAY RECEIVE
A SALES AND USE TAX CERTIFICATE OF EXEMPTION UNDER THIS
SUBARTICLE UNLESS THAT OWNER OR OPERATOR OR QUALIFIED TENANT
IS IN FULL COMPLIANCE WITH ALL STATE TAX LAWS.
(B) NOTIFICATION.--NO LATER THAN 60 DAYS AFTER THE
SUBMISSION UNDER SUBSECTION (A) FOR A SALES AND USE TAX
CERTIFICATE OF EXEMPTION, THE DEPARTMENT SHALL ISSUE A SALES AND
USE TAX CERTIFICATE OF EXEMPTION TO EACH APPLICANT APPROVED BY
THE DEPARTMENT.
(C) EXEMPT PURCHASES.--THE OWNER OR OPERATOR OR QUALIFIED
TENANT OF A CERTIFIED COMPUTER DATA CENTER SHALL PREPARE AND
DELIVER A PROPERLY EXECUTED SALES AND USE TAX CERTIFICATE OF
EXEMPTION TO A VENDOR FROM WHICH THE OWNER OR OPERATOR OR
QUALIFIED TENANT PURCHASES EXEMPT COMPUTER DATA CENTER
EQUIPMENT.]
SECTION 16. THE ACT IS AMENDED BY ADDING AN ARTICLE TO READ:
ARTICLE XXIX-J
ADDITIONAL PROPERTY TAX REBATE
SECTION 2901-J. DEFINITIONS.
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"ACCOUNT." THE RESTRICTED ACCOUNT ESTABLISHED UNDER SECTION
2902-J.
"CLAIMANT." AN INDIVIDUAL WHO FILES AN APPLICATION FOR THE
REBATE AUTHORIZED UNDER SECTION 2903-J WHO HAS FILED A CLAIM FOR
PROPERTY TAX AND:
(1) IS AN ELIGIBLE INDIVIDUAL; OR
(2) LIVES IN THE SAME HOUSEHOLD AS AN ELIGIBLE
INDIVIDUAL.
"DEPARTMENT." THE DEPARTMENT OF REVENUE OF THE COMMONWEALTH.
"ELIGIBLE INDIVIDUAL." AN INDIVIDUAL WHO RESIDES IN A
HOMESTEAD AND IS AT LEAST 65 YEARS OF AGE.
"HOMESTEAD." A DWELLING AND SO MUCH OF THE LAND SURROUNDING
IT, AS IS REASONABLY NECESSARY FOR THE USE OF THE DWELLING AS A
HOME, OCCUPIED BY A CLAIMANT. THE TERM INCLUDES:
(1) PREMISES OCCUPIED BY REASON OF OWNERSHIP OR LEASE IN
A COOPERATIVE HOUSING CORPORATION.
(2) MOBILE HOMES WHICH ARE ASSESSED AS REALTY FOR LOCAL
PROPERTY TAX PURPOSES AND THE LAND, IF OWNED OR RENTED BY THE
CLAIMANT, UPON WHICH THE MOBILE HOME IS SITUATED, AND OTHER
SIMILAR LIVING ACCOMMODATIONS.
(3) A PART OF A MULTIDWELLING OR MULTIPURPOSE BUILDING
AND A PART OF THE LAND UPON WHICH THE DWELLING OR BUILDING IS
BUILT.
(4) PREMISES OCCUPIED BY REASON OF THE CLAIMANT'S
OWNERSHIP OF A DWELLING LOCATED ON LAND OWNED BY A NONPROFIT
INCORPORATED ASSOCIATION, OF WHICH THE CLAIMANT IS A MEMBER,
IF THE CLAIMANT IS REQUIRED TO PAY A PRO RATA SHARE OF THE
PROPERTY TAXES LEVIED AGAINST THE ASSOCIATION'S LAND.
(5) PREMISES OCCUPIED BY A CLAIMANT IF THE CLAIMANT IS
REQUIRED BY LAW TO PAY A PROPERTY TAX BY REASON OF THE
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CLAIMANT'S OWNERSHIP, INCLUDING A POSSESSORY INTEREST, IN THE
DWELLING, THE LAND OR BOTH. AN OWNER INCLUDES A PERSON IN
POSSESSION UNDER A CONTRACT OF SALE, DEED OF TRUST, LIFE
ESTATE, JOINT TENANCY OR TENANCY IN COMMON OR BY REASON OF
STATUTES OF DESCENT AND DISTRIBUTION.
"PROPERTY TAX RELIEF FUND." THE PROPERTY TAX RELIEF FUND
ESTABLISHED UNDER 4 PA.C.S. § 1409 (RELATING TO PROPERTY TAX
RELIEF FUND).
"REAL PROPERTY TAXES." ALL TAXES ON A HOMESTEAD, EXCLUSIVE
OF MUNICIPAL ASSESSMENTS, DELINQUENT CHARGES AND INTEREST, DUE
AND PAYABLE DURING A CALENDAR YEAR.
"REBATE." THE REBATE AUTHORIZED UNDER SECTION 2903-J.
SECTION 2902-J. ACCOUNT ESTABLISHED.
THERE SHALL BE ESTABLISHED WITHIN THE PROPERTY TAX RELIEF
FUND A RESTRICTED ACCOUNT FOR THE PURPOSE OF PAYING THE REBATES
UNDER SECTION 2903-J. ALL OF THE MONEY COLLECTED UNDER SECTION
1101(A)(4) SHALL BE DEPOSITED INTO THE ACCOUNT.
SECTION 2903-J. ADDITIONAL PROPERTY TAX REBATE.
(A) ELIGIBILITY.--IN ADDITION TO THE REBATE AUTHORIZED UNDER
CHAPTER 13 OF THE ACT OF JUNE 27, 2006 (1ST SP.SESS., P.L.1873,
NO.1), KNOWN AS THE TAXPAYER RELIEF ACT, A CLAIMANT SHALL BE
ELIGIBLE TO RECEIVE A REBATE UNDER THIS ARTICLE.
(B) AMOUNT OF REBATE.--EACH APPROVED CLAIMANT SHALL RECEIVE
A REBATE IN AN AMOUNT EQUAL TO THE AMOUNT OF LOCAL SCHOOL REAL
ESTATE TAXES PAID BY THE APPROVED CLAIMANT IN THE CURRENT FISCAL
YEAR LESS THE AMOUNT PAID IN THE YEAR THE CLAIMANT TURNED 64
YEARS OF AGE, OR IF THE CLAIMANT IS NOT AT LEAST 65 YEARS OF
AGE, THE AMOUNT PAID IN THE YEAR THE ELIGIBLE INDIVIDUAL
RESIDING IN THE CLAIMANT'S HOMESTEAD TURNED 64 YEARS OF AGE.
SECTION 2904-J. FILING AND PAYMENT OF CLAIM.
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(A) FILING.--EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (B),
A CLAIM FOR A REBATE UNDER THIS ARTICLE SHALL BE FILED WITH THE
DEPARTMENT ON OR BEFORE THE 30TH DAY OF JUNE OF THE YEAR NEXT
SUCCEEDING THE END OF THE CALENDAR YEAR IN WHICH REAL PROPERTY
TAXES WAS DUE AND PAYABLE.
(B) PAYMENTS FROM ACCOUNT.--EXCEPT AS PROVIDED UNDER
SUBSECTION (C)(3), NO REIMBURSEMENT ON A CLAIM SHALL BE MADE
FROM THE ACCOUNT EARLIER THAN THE DAY FOLLOWING THE 30TH DAY OF
JUNE PROVIDED UNDER THIS SECTION ON WHICH THAT CLAIM MAY BE
FILED WITH THE DEPARTMENT.
(C) ELIGIBILITY OF CLAIMANTS.--
(1) ONLY ONE CLAIMANT FROM A HOMESTEAD EACH YEAR SHALL
BE ENTITLED TO THE REBATE.
(2) IF TWO OR MORE PEOPLE ARE ABLE TO MEET THE
QUALIFICATIONS FOR A CLAIMANT, THE INDIVIDUALS MAY DETERMINE
WHO THE CLAIMANT SHALL BE.
(3) IF THE INDIVIDUALS ARE UNABLE TO AGREE, THE
DEPARTMENT SHALL DETERMINE TO WHOM THE REBATE IS TO BE PAID.
SECTION 2905-J. PROOF OF CLAIM.
(A) CONTENTS.--EACH CLAIM SHALL BE SUBMITTED ON A FORM AND
IN A MANNER ESTABLISHED BY THE DEPARTMENT AND SHALL INCLUDE:
(1) THE SIZE AND NATURE OF THE PROPERTY CLAIMED AS A
HOMESTEAD.
(2) THE TAX RECEIPT OR OTHER PROOF THAT THE REAL
PROPERTY TAXES ON THE HOMESTEAD HAVE BEEN PAID.
(3) CERTIFICATION THAT THE CLAIMANT OR AN INDIVIDUAL IN
THE CLAIMANT'S HOUSEHOLD IS 65 YEARS OF AGE OR OLDER.
(B) DIRECT PAYMENT OF TAXES NOT REQUIRED.--IT SHALL NOT BE
NECESSARY THAT TAXES WERE PAID DIRECTLY BY THE CLAIMANT IF THE
TAXES HAVE BEEN PAID WHEN THE CLAIM IS FILED.
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SECTION 2906-J. INCORRECT CLAIM.
WHENEVER ON AUDIT OF A CLAIM THE DEPARTMENT FINDS THE CLAIM
TO HAVE BEEN INCORRECTLY DETERMINED, IT SHALL REDETERMINE THE
CORRECT AMOUNT OF THE CLAIM AND NOTIFY THE CLAIMANT OF THE
REASON FOR THE REDETERMINATION AND THE AMOUNT OF THE CORRECTED
CLAIM.
SECTION 2907-J. FUNDS FOR PAYMENT OF CLAIMS.
APPROVED CLAIMS SHALL BE PAID FROM THE ACCOUNT.
SECTION 17. SECTION 3003.2(B)(2) AND (4.3) AND (C)(1) OF THE
ACT ARE AMENDED AND SUBSECTION (A) IS AMENDED BY ADDING A
PARAGRAPH TO READ:
SECTION 3003.2. ESTIMATED TAX.--(A) THE FOLLOWING TAXPAYERS
ARE REQUIRED TO PAY ESTIMATED TAX:
* * *
(1.1) EVERY UNITARY BUSINESS SUBJECT TO THE CORPORATE NET
INCOME TAX IMPOSED BY ARTICLE IV, COMMENCING WITH THE CALENDAR
YEAR 2027 AND FISCAL YEARS BEGINNING DURING THE CALENDAR YEAR
2027 AND EACH TAXABLE YEAR THEREAFTER, SHALL MAKE PAYMENTS OF
ESTIMATED CORPORATE NET INCOME TAX.
* * *
(B) THE FOLLOWING WORDS, TERMS AND PHRASES WHEN USED IN THIS
SECTION AND SECTION 3003.3 SHALL HAVE THE FOLLOWING MEANINGS
ASCRIBED TO THEM:
* * *
(2) "ESTIMATED CORPORATE NET INCOME TAX." THE AMOUNT WHICH
THE CORPORATION OR THE UNITARY BUSINESS ESTIMATES AS THE AMOUNT
OF TAX IMPOSED BY SECTION 402 OF ARTICLE IV FOR THE TAXABLE
YEAR.
* * *
(4.3) "PERSON." ANY NATURAL PERSON, ASSOCIATION, FIDUCIARY,
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PARTNERSHIP, CORPORATION, UNITARY BUSINESS OR OTHER ENTITY,
INCLUDING THE COMMONWEALTH, ITS POLITICAL SUBDIVISIONS AND
INSTRUMENTALITIES AND PUBLIC AUTHORITIES. WHENEVER USED IN ANY
CLAUSE PRESCRIBING AND IMPOSING A PENALTY OR IMPOSING A FINE OR
IMPRISONMENT, OR BOTH, THE TERM "PERSON," AS APPLIED TO AN
ASSOCIATION, SHALL INCLUDE THE MEMBERS THEREOF [AND], AS APPLIED
TO A CORPORATION, THE OFFICERS THEREOF AND AS APPLIED TO A
UNITARY BUSINESS, THE OFFICERS OF THE DESIGNATED MEMBER.
* * *
(C) ESTIMATED TAX SHALL BE PAID AS FOLLOWS:
(1) PAYMENTS OF ESTIMATED CORPORATE NET INCOME TAX SHALL BE
MADE IN EQUAL INSTALLMENTS ON OR BEFORE THE FIFTEENTH DAY OF THE
THIRD, SIXTH, NINTH AND TWELFTH MONTHS OF THE TAXABLE YEAR. THE
REMAINING PORTION OF THE CORPORATE NET INCOME TAX DUE, IF ANY,
SHALL BE PAID UPON THE DATE THE CORPORATION'S ANNUAL REPORT OR
THE UNITARY BUSINESS'S COMBINED ANNUAL REPORT IS REQUIRED TO BE
FILED WITHOUT REFERENCE TO ANY EXTENSION OF TIME FOR FILING SUCH
REPORT.
* * *
SECTION 18. SECTION 3003.3(D) OF THE ACT IS AMENDED AND THE
SECTION IS AMENDED BY ADDING A SUBSECTION TO READ:
SECTION 3003.3. UNDERPAYMENT OF ESTIMATED TAX.--* * *
(D) NOTWITHSTANDING THE PROVISIONS OF [THE PRECEDING
SUBSECTIONS,] THIS SECTION, OTHER THAN AS SET FORTH IN
SUBSECTION (D.1), INTEREST WITH RESPECT TO ANY UNDERPAYMENT OF
ANY INSTALLMENT OF ESTIMATED TAX SHALL NOT BE IMPOSED IF THE
TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX MADE ON OR BEFORE
THE LAST DATE PRESCRIBED FOR THE PAYMENT OF SUCH INSTALLMENT
EQUALS OR EXCEEDS THE AMOUNT WHICH WOULD HAVE BEEN REQUIRED TO
BE PAID ON OR BEFORE SUCH DATE IF THE ESTIMATED TAX WERE AN
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AMOUNT EQUAL TO THE TAX COMPUTED AT THE RATES APPLICABLE TO THE
TAXABLE YEAR, INCLUDING ANY MINIMUM TAX IMPOSED, BUT OTHERWISE
ON THE BASIS OF THE FACTS SHOWN ON THE REPORT OF THE TAXPAYER
FOR, AND THE LAW APPLICABLE TO, THE SAFE HARBOR BASE YEAR,
ADJUSTED FOR ANY CHANGES TO SECTIONS 401, 601, 602 AND 1101
ENACTED FOR THE TAXABLE YEAR, IF A REPORT SHOWING A LIABILITY
FOR TAX WAS FILED BY THE TAXPAYER FOR THE SAFE HARBOR BASE YEAR.
IF THE TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX MADE ON OR
BEFORE THE LAST DATE PRESCRIBED FOR THE PAYMENT OF SUCH
INSTALLMENT DOES NOT EQUAL OR EXCEED THE AMOUNT REQUIRED TO BE
PAID PER THE PRECEDING SENTENCE, BUT SUCH AMOUNT IS PAID AFTER
THE DATE THE INSTALLMENT WAS REQUIRED TO BE PAID, THEN THE
PERIOD OF UNDERPAYMENT SHALL RUN FROM THE DATE THE INSTALLMENT
WAS REQUIRED TO BE PAID TO THE DATE THE AMOUNT REQUIRED TO BE
PAID PER THE PRECEDING SENTENCE IS PAID. PROVIDED, THAT IF THE
TOTAL TAX FOR THE SAFE HARBOR BASE YEAR EXCEEDS THE TAX SHOWN ON
SUCH REPORT BY TEN PER CENT OR MORE, THE TOTAL TAX ADJUSTED TO
REFLECT THE CURRENT TAX RATE SHALL BE USED FOR PURPOSES OF THIS
SUBSECTION. IN THE EVENT THAT THE TOTAL TAX FOR THE SAFE HARBOR
BASE YEAR EXCEEDS THE TAX SHOWN ON THE REPORT BY TEN PER CENT OR
MORE, INTEREST RESULTING FROM THE UTILIZATION OF SUCH TOTAL TAX
IN THE APPLICATION OF THE PROVISIONS OF THIS SUBSECTION SHALL
NOT BE IMPOSED IF, WITHIN FORTY-FIVE DAYS OF THE MAILING DATE OF
EACH ASSESSMENT, PAYMENTS ARE MADE SUCH THAT THE TOTAL AMOUNT OF
ALL PAYMENTS OF ESTIMATED TAX EQUALS OR EXCEEDS THE AMOUNT WHICH
WOULD HAVE BEEN REQUIRED TO BE PAID ON OR BEFORE SUCH DATE IF
THE ESTIMATED TAX WERE AN AMOUNT EQUAL TO THE TOTAL TAX ADJUSTED
TO REFLECT THE CURRENT TAX RATE. IN ANY CASE IN WHICH THE
TAXABLE YEAR FOR WHICH AN UNDERPAYMENT OF ESTIMATED TAX MAY
EXIST IS A SHORT TAXABLE YEAR, IN DETERMINING THE TAX SHOWN ON
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THE REPORT OR THE TOTAL TAX FOR THE SAFE HARBOR BASE YEAR, THE
TAX WILL BE REDUCED BY MULTIPLYING IT BY THE RATIO OF THE NUMBER
OF INSTALLMENT PAYMENTS MADE IN THE SHORT TAXABLE YEAR TO THE
NUMBER OF INSTALLMENT PAYMENTS REQUIRED TO BE MADE FOR THE FULL
TAXABLE YEAR.
(D.1) WITH RESPECT TO ANY UNDERPAYMENT OF AN INSTALLMENT OF
ESTIMATED CORPORATE NET INCOME TAX FOR ANY TAX YEAR THAT BEGINS
IN TAXABLE YEAR 2027 OR 2028 BY A CORPORATION REQUIRED TO FILE A
COMBINED ANNUAL REPORT PURSUANT TO SECTION 403(A.1)(1), INTEREST
SHALL NOT BE IMPOSED IF THE TOTAL AMOUNT OF ALL PAYMENTS OF
ESTIMATED CORPORATE NET INCOME TAX MADE ON OR BEFORE THE LAST
DATE PRESCRIBED FOR THE PAYMENT OF SUCH INSTALLMENT EQUALS OR
EXCEEDS THE AMOUNT WHICH WOULD HAVE BEEN REQUIRED TO BE PAID ON
OR BEFORE SUCH DATE IF THE ESTIMATED TAX WERE AN AMOUNT EQUAL TO
THE COMBINED TAX SHOWN ON THE REPORTS OF ALL THE MEMBERS OF THE
UNITARY BUSINESS FOR THE SAFE HARBOR BASE YEAR COMPUTED AT THE
RATE APPLICABLE TO THE TAXABLE YEAR.
SECTION 19. SECTION 3003.11 OF THE ACT IS AMENDED TO READ:
SECTION 3003.11. RESTATEMENT OF TAX LIABILITY UNDER
TREATIES.--IN THE ABSENCE OF AN EXPRESS EXEMPTION FROM STATE
INCOME TAXES, NO TREATY OF THE FEDERAL GOVERNMENT SHALL BE
CONSTRUED TO EXEMPT A CORPORATION OR A MEMBER OF A UNITARY
BUSINESS FROM THE TAXES IMPOSED UNDER ARTICLES IV AND VI. FOR
PURPOSES OF DETERMINING "TAXABLE INCOME" UNDER ARTICLE IV, ANY
CORPORATION OR MEMBER OF A UNITARY BUSINESS NOT SUBJECT TO
FEDERAL INCOME TAXATION OR FEDERAL REPORTING REQUIREMENTS
PURSUANT TO SUCH A TREATY SHALL BE REQUIRED TO FILE A REPORT OR
FILE AS PART OF A COMBINED ANNUAL REPORT WITH THE DEPARTMENT
SHOWING THE TAXABLE INCOME WHICH WOULD HAVE BEEN REPORTED TO AND
ASCERTAINED BY THE FEDERAL GOVERNMENT HAD IT NOT BEEN EXEMPTED
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BY THE TREATY.
SECTION 20. THE ACT IS AMENDED BY ADDING A SECTION TO READ:
SECTION 3003.26. DATA CENTERS.--(A) UNLESS CERTIFIED UNDER
ARTICLE XXIX-D PRIOR TO FEBRUARY 3, 2026, A COMPUTER DATA CENTER
SHALL NOT BE ELIGIBLE FOR TAX BENEFITS UNDER ARTICLE XVIII-C OR
XIX-B OR THE ACT OF OCTOBER 6, 1998 (P.L.705, NO.92), KNOWN AS
THE KEYSTONE OPPORTUNITY ZONE, KEYSTONE OPPORTUNITY EXPANSION
ZONE AND KEYSTONE OPPORTUNITY IMPROVEMENT ZONE ACT.
(B) AS USED IN THIS SECTION, THE FOLLOWING WORDS AND PHRASES
SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SUBSECTION UNLESS
THE CONTEXT CLEARLY INDICATES OTHERWISE:
"COMPUTER DATA CENTER." ALL OR PART OF A FACILITY THAT MAY
BE COMPOSED OF ONE OR MORE BUSINESSES, OWNERS OR TENANTS, THAT
IS OR WILL BE PREDOMINANTLY USED TO HOUSE WORKING SERVERS OR
SIMILAR DATA STORAGE SYSTEMS AND THAT MAY HAVE UNINTERRUPTIBLE
ENERGY SUPPLY OR GENERATOR BACKUP POWER, OR BOTH, COOLING
SYSTEMS, TOWERS AND OTHER TEMPERATURE CONTROL INFRASTRUCTURE.
SECTION 21. THE TRANSITION FROM ARTICLE XX-B OF THE ACT OF
MARCH 10, 1949 (P.L.30, NO.14), KNOWN AS THE PUBLIC SCHOOL CODE
OF 1949, TO ARTICLE XVII-E.1 OF THE ACT SHALL BE AS FOLLOWS:
(1) ARTICLE XX-B OF THE PUBLIC SCHOOL CODE OF 1949 SHALL
CONTINUE TO APPLY TO A TAX CREDIT APPROVED FOR A FISCAL YEAR
PRIOR TO THE 2027-2028 FISCAL YEAR, A CONTRIBUTION MADE UNDER
AN APPROVAL ISSUED FOR A FISCAL YEAR PRIOR TO THE 2027-2028
FISCAL YEAR, A REPORT REQUIRED FOR A FISCAL YEAR PRIOR TO THE
2027-2028 FISCAL YEAR AND AN ADMINISTRATIVE, ENFORCEMENT, TAX
OR REPORTING MATTER ARISING FROM A TAX CREDIT OR CONTRIBUTION
UNDER ARTICLE XX-B OF THE PUBLIC SCHOOL CODE OF 1949.
(2) THE ADDITION OF ARTICLE XVII-E.1 OF THE ACT SHALL
APPLY TO TAX CREDITS APPROVED FOR THE 2027-2028 FISCAL YEAR
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AND EACH FISCAL YEAR THEREAFTER.
SECTION 22. THIS ACT SHALL APPLY AS FOLLOWS:
(1) THE FOLLOWING PROVISIONS OF THE ACT SHALL APPLY TO
TAX YEARS BEGINNING ON AND AFTER JANUARY 1, 2026:
THE AMENDMENT OF SECTION 1101(A).
THE ADDITION OF SECTION 1710-A.1.
(2) THE FOLLOWING PROVISIONS OF THE ACT SHALL APPLY TO
TAX YEARS BEGINNING AFTER DECEMBER 31, 2026:
THE AMENDMENT OR ADDITION OF SECTION 401(3)1(A) AND
(B), (P.1) AND (T)(5), 2(A)(1)(E.1), 2(A)(9)(A)(VI) AND
2(A)(17)(E) AND 4(H) AND (I), (5), (12), (13), (14),
(15), (16), (17), (18) AND (19).
THE ADDITION OF SECTION 401.1(F).
THE AMENDMENT OR ADDITION OF SECTIONS 402(A)
INTRODUCTORY PARAGRAPH AND (5)(III) AND (D) AND 403(A.1),
(A.2), (B.1), (C), (D), (E.1) AND (F).
THE AMENDMENT OF SECTIONS 403.1 AND 403.2(B) AND (E).
THE REPEAL OF SECTION 404.
THE AMENDMENT OF SECTION 405.
THE AMENDMENT OR ADDITION OF SECTION 406(E) AND (F).
THE AMENDMENT OF SECTIONS 407.3(F), 407.6(A)(5), (6)
AND (8) AND 407.7(D)(3).
THE ADDITION OF SECTION 408(E).
THE AMENDMENT OF SECTIONS 409 AND 410(C).
THE AMENDMENT OR ADDITION OF SECTION 3003.2(A)(1.1),
(B)(2) AND (4.3) AND (C)(1).
THE AMENDMENT OR ADDITION OF SECTION 3003.3(D) AND
(D.1).
THE AMENDMENT OF SECTION 3003.11.
SECTION 23. THIS ACT SHALL TAKE EFFECT IMMEDIATELY.
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