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§ 7407.7. Manufacturing innovation and reinvestment deduction

Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 72 P.S. Taxation and Fiscal AffairsEffective: December 14, 2023

Purdon's Pennsylvania Statutes and Consolidated Statutes
Title 72 P.S. Taxation and Fiscal Affairs
Chapter 5. Tax Reform Code of 1971 (Refs & Annos)
Article IV. Corporate Net Income Tax (Refs & Annos)
Part IV-a. Qualified Manufacturing Innovation and Reinvestment Deduction
Effective: December 14, 2023
72 P.S. § 7407.7
§ 7407.7. Manufacturing innovation and reinvestment deduction
Currentness
<Section 2(2) of Act 2023, Dec. 14, P.L. 460, No. 64, imd. effective, provides that the amendment of 72 P.S. § 7407.7 by that Act shall apply to tax years beginning after Dec. 31, 2023.>
(a) In order to be eligible to receive a manufacturing innovation and reinvestment deduction, a taxpayer must demonstrate to the department a private capital investment in excess of fifty million dollars ($50,000,000) for the creation of new or refurbished manufacturing capacity within the applicable time period specified in subsection (b). The department's calculation of eligible expenses for a qualified manufacturing innovation and reinvestment deduction shall include payments made in advance of the start date of a project if the payments are made for the purchase of, or partial payment for, new equipment for the project that exceeds one million dollars ($1,000,000) in value.
(b)(1) A taxpayer must advise the department in advance of the start date of any project for which the taxpayer may seek a qualified manufacturing innovation and reinvestment deduction. A taxpayer must attest the taxpayer's intent to meet the eligibility criteria and provide relevant information pertinent to the project's size and scope in a manner as determined by the department.
(2) For a private capital investment of less than or equal to one hundred fifty million dollars ($150,000,000), the following shall apply:
(i) The project must be completed within three years of the project's start date.
(ii) Within five years of the project's start date, the taxpayer must complete to the department's satisfaction an application on a form and in a manner as determined by the department to attest that the project has been completed and the eligibility criteria has been satisfied.
(3) For a private capital investment of more than one hundred fifty million one dollars ($150,000,001) and less than two hundred fifty million dollars ($250,000,000), the following shall apply:
(i) The project must be completed within five years of the project's start date.
(ii) Within seven years of the project's start date, the taxpayer must complete to the department's satisfaction an application on a form and in a manner as determined by the department to attest that the project has been completed and the eligibility criteria has been satisfied.
(4) For a private capital investment of more than two hundred fifty million one dollars ($250,000,001) and less than three hundred fifty million dollars ($350,000,000), the following shall apply:
(i) The project must be completed within seven years of the project's start date.
(ii) Within nine years of the project's start date, the taxpayer must complete to the department's satisfaction an application on a form and in a manner as determined by the department to attest that the project has been completed and the eligibility criteria has been satisfied.
(5) For a private capital investment of more than three hundred fifty million one dollars ($350,000,001), the department shall establish the time period from the project's start date in which the project must be completed and the time period in which the application as described in paragraph (4) must be completed.
(c) Upon the receipt of the taxpayer's application, the Department of Revenue shall make a finding whether the applicant has filed all required State tax reports and returns for all applicable tax years and paid any balance of State tax due as determined at settlement, assessment or determination, and the department, then in conjunction with the Department of Revenue, shall make an eligibility or satisfaction determination within ninety days of submission. If the department makes a satisfaction determination, the department and the taxpayer shall execute a satisfaction commitment letter containing the following:
(1) The number of new jobs created and their corresponding description.
(2) The number of new jobs created during construction of the project.
(3) The amount of private capital investment in the creation of new jobs.
(4) The increase in the annual taxable payroll attributable to new manufacturing jobs.
(5) A determination of the maximum allowable deduction against a taxpayer's qualified tax liability under this article.
(6) Any other information as the department deems appropriate.
(d)(1) Deleted by 2019, June 28, P.L. 50, No. 13, § 10.4, effective July 1, 2019.
(1.1) If the private capital investment is in excess of sixty million dollars ($60,000,000), but not more than one hundred million dollars ($100,000,000), the maximum allowable deduction shall be equal to thirty-seven and one-half per cent of the private capital investment utilized in the creation of new or refurbished manufacturing capacity. A taxpayer may utilize the deduction in an amount not to exceed seven and one-half per cent of the private capital investment utilized in the creation of new or refurbished manufacturing capacity in any one year of the succeeding ten tax years immediately following the department's satisfaction determination and the execution of a satisfaction commitment letter, up to the maximum allowable deduction. This paragraph shall only apply to applications made prior to January 1, 2024.
(1.2) If a taxpayer's private capital investment for a project exceeds fifty million dollars ($50,000,000), the maximum allowable deduction shall be equal to twenty-five per cent of the private capital investment utilized in the creation of new or refurbished manufacturing capacity. A taxpayer may utilize the deduction in an amount not to exceed five per cent of the private capital investment utilized in the creation of new or refurbished manufacturing capacity in any one year during a time period equal to the time period specified in section 401(3)4(c)(2)(A) for the year immediately following the department's satisfaction determination and the execution of a satisfaction commitment letter, up to the maximum allowable deduction.
(2) Deleted by 2019, June 28, P.L. 50, No. 13, § 10.4, effective July 1, 2019.
(3) 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. The deduction is nontransferable and any unused portion in a tax year shall expire at the end of the corresponding tax year.

Credits

1971, March 4, P.L. 6, No. 2, art. IV, § 407.7, added 2017, Oct. 30, P.L. 672, No. 43, § 28, effective in 60 days [Dec. 29, 2017]. Amended 2019, June 28, P.L. 50, No. 13, § 10.4, effective July 1, 2019; 2023, Dec. 14, P.L. 460, No. 64, § 1, imd. effective.
72 P.S. § 7407.7, PA ST 72 P.S. § 7407.7
Current through Act 10 of the 2024 Regular Session. Some statute sections may be more current, see credits for details.
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