Bill Text: PA SB601 | 2009-2010 | Regular Session | Introduced

---

Bill Title: Further providing for delegation of taxing powers and restrictions.

Spectrum: Moderate Partisan Bill (Republican 5-1)

Status: (Introduced - Dead) 2009-04-28 - Re-referred to APPROPRIATIONS [SB601 Detail]

Download: Pennsylvania-2009-SB601-Introduced.html

---

PRINTER'S NO. 651
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 601 Session of2009
INTRODUCED BY BROWNE, ORIE, ALLOWAY, FOLMER, WAUGH AND LEACH, MARCH 12, 2009
REFERRED TO FINANCE, MARCH 12, 2009
AN ACT
Amending the act of December 31, 1965 (P.L.1257, No.511),
entitled "An act empowering cities of the second class,
cities of the second class A, cities of the third class,
boroughs, towns, townships of the first class, townships of
the second class, school districts of the second class,
school districts of the third class and school districts of
the fourth class including independent school districts, to
levy, assess, collect or to provide for the levying,
assessment and collection of certain taxes subject to maximum
limitations for general revenue purposes; authorizing the
establishment of bureaus and the appointment and compensation
of officers, agencies and employes to assess and collect such
taxes; providing for joint collection of certain taxes,
prescribing certain definitions and other provisions for
taxes levied and assessed upon earned income, providing for
annual audits and for collection of delinquent taxes, and
permitting and requiring penalties to be imposed and
enforced, including penalties for disclosure of confidential
information, providing an appeal from the ordinance or
resolution levying such taxes to the court of quarter
sessions and to the Supreme Court and Superior Court,"
further providing for delegation of taxing powers and
restrictions.
The General Assembly finds and declares as follows:
(1) On December 27, 2007, the Pennsylvania Supreme
Court, in the case of V.L. Rendina, Inc. v. the City of
Harrisburg and the Harrisburg School District, 938 A.2d 988
(Pa. 2007), concluded that The Local Tax Enabling Act did not
require a permanent base of operations in the taxing
jurisdiction before a business privilege tax could be
imposed.
(2) As a result of the Rendina decision, the long-
standing rule of base of operations, which was construed as a
place of business, is no longer needed for business privilege
taxation under The Local Tax Enabling Act.
(3) By eliminating the rule requiring a base of
operations, the business privilege tax becomes a transaction
tax, which may otherwise have been unauthorized under The
Local Tax Enabling Act.
(4) It is the intent of the General Assembly to clarify
that the maintenance of a permanent place of business or base
of operations, within a municipality used to conduct business
both within and outside the municipality, is required to
subject a company to business privilege taxation within the
municipality.
(5) It is the legislative intent of the General Assembly
to clarify existing law and repeal the Rendina decision by
virtue of this legislation.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 301.1(f)(12) of the act of December 31,
1965 (P.L.1257, No.511), known as The Local Tax Enabling Act,
amended October 15, 2008 (P.L.1615, No.130), is amended to read:
Section 301.1. Delegation of Taxing Powers and Restrictions
Thereon.--* * *
(f) Such local authorities shall not have authority by
virtue of this act:
* * *
20090SB0601PN0651 - 2 -
(12) To levy, assess and collect a mercantile or business
privilege tax on gross receipts or part thereof which are: (i)
discounts allowed to purchasers as cash discounts for prompt
payment of their bills; (ii) charges advanced by a seller for
freight, delivery or other transportation for the purchaser in
accordance with the terms of a contract of sale; (iii) received
upon the sale of an article of personal property which was
acquired by the seller as a trade-in to the extent that the
gross receipts in the sale of the article taken in trade does
not exceed the amount of trade-in allowance made in acquiring
such article; (iv) refunds, credits or allowances given to a
purchaser on account of defects in goods sold or merchandise
returned; (v) Pennsylvania sales tax; (vi) based on the value of
exchanges or transfers between one seller and another seller who
transfers property with the understanding that property of an
identical description will be returned at a subsequent date;
however, when sellers engaged in similar lines of business
exchange property and one of them makes payment to the other in
addition to the property exchanged, the additional payment
received may be included in the gross receipts of the seller
receiving such additional cash payments; (vii) of sellers from
sales to other sellers in the same line where the seller
transfers the title or possession at the same price for which
the seller acquired the merchandise; or (viii) transfers between
one department, branch or division of a corporation or other
business entity of goods, wares and merchandise to another
department, branch or division of the same corporation or
business entity and which are recorded on the books to reflect
such interdepartmental transactions. A mercantile or business
privilege tax on gross receipts or on the privilege of doing
20090SB0601PN0651 - 3 -
business within or from a location within a local taxing
jurisdiction may be imposed by a local taxing jurisdiction only
if the privilege of doing business is exercised through a base
of operations in the local taxing jurisdiction. In the case of a
tax on the privilege of doing business within or from a location
within a local taxing jurisdiction, no tax shall be imposed on
gross receipts from activities which are also subject to a tax
imposed by another local taxing jurisdiction on business
transacted within that other jurisdiction. The taxpayer may
exclude the gross receipts that are taxed or taxable in the
other local jurisdiction. For purposes of this section, the term
"base of operations" shall mean an actual, physical and
permanent place of business from which a taxpayer manages,
directs and controls its business activities at that location.
For purposes of this section, the term "permanent" shall mean a
building or other structure owned or rented or used by the
taxpayer that is permanently attached to the ground via a fixed
foundation or similar construction and which cannot be removed
without demolition or dismantling.
* * *
Section 2. The amendment of section 301.1(f)(12) of the act
is intended as a clarification of existing law and is not
intended to establish new rights or enlarge existing rights of
local taxing jurisdictions or establish new obligations or
enlarge existing obligations of taxpayers.
Section 3. The amendment of section 301.1(f)(12) of the act
shall apply retroactively to December 27, 2007.
Section 4. This act shall take effect in 60 days.
20090SB0601PN0651 - 4 -