Vote Smart's Synopsis:

Vote to pass a bill that amends the tax code by reducing the corporate income tax and specifying taxes for "affiliated entities."

Highlights:

• Reduces the annual tax rate on corporate net income from 9.99 percent to 6.99 in taxable year increments between December 31, 2014 and January 1, 2025 (Sec. 11).

• Requires the tax treatment of the sale of real property, tangible personal property, and services that take place both in and outside Pennsylvania be determined as follows (Sec. 10):
• The sale of real property is determined by the percentage of total assessed value of real property located in the state;
• The rental, lease or licensing of tangible personal property is determined by the estimate of usage in the state to determine extent of sale in the state if taken out of the state; and
• The sale of service is determined by the percentage of total value of the service delivered to a location in this state if the service is delivered both to a location in and outside the state.

• Prohibits tax deductions for an intangible expense or cost, an interest expense or cost, incurred in connection with transactions with an “affiliated entity” (Sec. 10).

• Defines an “affiliated entity” as an individual with a relationship to the taxpayer that is defined by any of the following definitions (Sec. 10):
• A stockholder and the members of the stockholder’s family if they own more than 50 percent of the value of the taxpayer’s outstanding stock;
• A stockholder’s partnership, limited liability company, estate, trust or corporation owns more than 50 percent of the value of the taxpayer’s outstanding stock; and
• A corporation or part affiliated with the corporation owns more that 50 percent of the value of the corporation’s outstanding stock.

• Specifies that changes in the total net loss deduction allowed in taxable years are the lesser of the following (Sec. 10):
• The greater of 25 percent of taxable income or $4 million for the taxable year beginning after December 31, 2013; and
• The greater of 30 percent of taxable income or $5 million for taxable years beginning after December 31, 2014. 

• Repeals the Coal Waste Removal and Ultraclean Fuels Tax Credit (Sec. 12)

• Requires a penalty of $500 plus 1 percent for every dollar of tax due in excess of $25,000 to be added to the total tax due if any corporation makes a false tax report (Sec. 12).

• Requires a partnership or corporation underreporting income by more than $1 million to be jointly liable with each partner or shareholder for a deficiency resulting from the treatment of a partnership or corporate item by a partner (Sec. 4).

• Specifies that 1 partner or shareholder is not liable for a payment of a tax liability of another partner or shareholder (Secs. 4 & 5). 

Full Bill Text