SENATE AMENDED PRIOR PRINTER'S NOS. 229, 2381, 2815 PRINTER'S NO. 3160 2820 THE GENERAL ASSEMBLY OF PENNSYLVANIA HOUSE BILL No. 200 Session of 2003 INTRODUCED BY PRIME SPONSOR WITHDREW, BELARDI, BISHOP, CAWLEY, CLYMER, CORRIGAN, COY, CRUZ, DeWEESE, FREEMAN, HARHAI, HERSHEY, HORSEY, LAUGHLIN, McCALL, MELIO, READSHAW, ROSS, RUFFING, SCRIMENTI, STABACK, SURRA, TIGUE, WALKO, WANSACZ, YOUNGBLOOD, PISTELLA, ROBERTS, SHANER, MANDERINO, CURRY, CIVERA, WASHINGTON AND THOMAS, FEBRUARY 11, 2003 SENATE AMENDMENTS TO HOUSE AMENDMENTS, DECEMBER 20, 2003 AN ACT 1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An 2 act relating to tax reform and State taxation by codifying 3 and enumerating certain subjects of taxation and imposing 4 taxes thereon; providing procedures for the payment, 5 collection, administration and enforcement thereof; providing 6 for tax credits in certain cases; conferring powers and 7 imposing duties upon the Department of Revenue, certain 8 employers, fiduciaries, individuals, persons, corporations 9 and other entities; prescribing crimes, offenses and 10 penalties," further providing, in sales and use tax, for < 11 definitions and for licenses; providing, in sales and use 12 tax, for Supplemental Public Transportation Assistance Fund 13 transfers; further providing, in personal income tax, for 14 definitions, for imposition, for special tax provisions for 15 poverty, for returns and liability and for returns and 16 records; further providing, in corporate net income tax, for 17 definitions and for interests in unincorporated entities; 18 further providing, in capital stock franchise tax, for 19 definitions, for imposition and for expiration; further 20 providing, in utilities gross receipts tax, for imposition; 21 further providing, in public utility realty tax, for 22 surcharges; further providing, in research and development 23 tax credit, for carryover, for limitations and for reports; 24 further providing, in inheritance tax, for definitions; and 25 further providing for estimated tax, for underpayment of 26 estimated tax, for tax clearance for licenses, for authority 27 to attach wages and for Keystone Opportunity Zones; and 28 making repeals.

1 FURTHER PROVIDING, IN SALES AND USE TAX, FOR DEFINITIONS, FOR < 2 EXCLUSIONS, FOR CREDITS, FOR LICENSES AND FOR TRANSFERS TO 3 PUBLIC TRANSPORTATION ASSISTANCE FUND; FURTHER PROVIDING, IN 4 PERSONAL INCOME TAX, FOR DEFINITIONS, FOR IMPOSITION, FOR 5 SPECIAL TAX PROVISIONS FOR POVERTY, FOR RETURNS AND LIABILITY 6 AND FOR RETURNS AND RECORDS; FURTHER PROVIDING, IN CORPORATE 7 NET INCOME TAX, FOR DEFINITIONS AND FOR INTERESTS IN 8 UNINCORPORATED ENTITIES; PROVIDING, IN CORPORATE NET INCOME 9 TAX, FOR ADDITIONAL WITHHOLDING REQUIREMENTS; FURTHER 10 PROVIDING, IN CAPITAL STOCK FRANCHISE TAX, FOR DEFINITIONS 11 AND REPORTS, FOR IMPOSITION AND FOR EXPIRATION; FURTHER 12 PROVIDING, IN UTILITIES GROSS RECEIPTS TAX, FOR IMPOSITION; 13 FURTHER PROVIDING, IN PUBLIC UTILITY REALTY TAX, FOR 14 SURCHARGES; PROVIDING, IN PUBLIC UTILITY REALTY TAX, FOR 15 ADDITIONAL TAX; FURTHER PROVIDING, IN CIGARETTE TAX, FOR 16 INCIDENCE AND RATE OF TAX, FOR FLOOR TAX, FOR STAMP TO 17 EVIDENCE THE TAX AND FOR COMMISSIONS ON SALES; ESTABLISHING, 18 IN RELATION TO CIGARETTE TAX, THE HEALTH CARE PROVIDER 19 RETENTION ACCOUNT; FURTHER PROVIDING, IN RESEARCH AND 20 DEVELOPMENT TAX CREDIT, FOR CARRYOVER, FOR LIMITATIONS AND 21 FOR REPORTS; FURTHER PROVIDING, IN MALT BEVERAGE TAX, FOR 22 LIMITED TAX CREDITS; FURTHER PROVIDING, IN INHERITANCE TAX, 23 FOR DEFINITIONS, FOR EXEMPT TRANSFERS, FOR ESTATE TAX AND FOR 24 ESTATE TAX RETURNS; FURTHER PROVIDING FOR THE PUBLIC 25 TRANSPORTATION ASSISTANCE FUND AND PROVIDING FOR ITS 26 ADMINISTRATION; FURTHER PROVIDING FOR ESTIMATED TAX AND FOR 27 UNDERPAYMENT OF ESTIMATED TAX; PROVIDING FOR AUTHORITY TO 28 ATTACH WAGES; AND REPEALING PROVISIONS RELATING TO THE PUBLIC 29 TRANSPORTATION ASSISTANCE FUND. 30 The General Assembly of the Commonwealth of Pennsylvania 31 hereby enacts as follows: 32 Section 1. Section 201(d) of the act of March 4, 1971 < 33 (P.L.6, No.2), known as the Tax Reform Code of 1971, is amended 34 by adding a clause to read: 35 Section 201. Definitions.--The following words, terms and 36 phrases when used in this Article II shall have the meaning 37 ascribed to them in this section, except where the context 38 clearly indicates a different meaning: 39 * * * 40 (d) "Processing." The performance of the following 41 activities when engaged in as a business enterprise: 42 * * * __________________________________________________________ 43 (17) The producing of mobile telecommunications services. 44 * * * 20030H0200B3160 - 2 -

1 Section 2. Section 208 of the act of March 4, 1971 (P.L.6, 2 No.2), known as the Tax Reform Code of 1971, amended August 4, 3 1991 (P.L.97, No.22), June 16, 1994 (P.L.279, No.48), June 30, 4 1995 (P.L.139, No.21), and June 29, 2002 (P.L.559, No.89), is 5 amended to read: 6 Section 208. Licenses.--(a) Every person maintaining a 7 place of business in this Commonwealth, selling or leasing 8 services or tangible personal property, the sale or use of which 9 is subject to tax and who has not hitherto obtained a license 10 from the department, shall, prior to the beginning of business 11 thereafter, make application to the department, on a form 12 prescribed by the department, for a license. If such person 13 maintains more than one place of business in this Commonwealth, 14 the license shall be issued for the principal place of business 15 in this Commonwealth. 16 (b) The department shall, after the receipt of an 17 application, issue the license applied for under subsection (a) 18 of this section, provided said applicant shall have filed all 19 required State tax reports and paid any State taxes not subject 20 to a timely perfected administrative or judicial appeal or 21 subject to a duly authorized deferred payment plan. Such license 22 shall be nonassignable. All licensees as of the effective date 23 of this subsection shall be required to file for renewal of said 24 license on or before January 31, 1992. Licenses issued through 25 April 30, 1992, shall be based on a staggered renewal system 26 established by the department. Thereafter, any license issued 27 shall be valid for a period of five years. 28 (b.1) If an applicant for a license or any person holding a 29 license has not filed all required State tax reports and paid 30 any State taxes not subject to a timely perfected administrative 20030H0200B3160 - 3 -

1 or judicial appeal or subject to a duly authorized deferred 2 payment plan, the department may refuse to issue, may suspend or 3 may revoke said license. The department shall notify the 4 applicant or licensee of any refusal, suspension or revocation. _______________________________________________________ 5 Such notice shall contain a statement that the refusal, ____________________________________________ 6 suspension or revocation may be made public. Such notice shall 7 be made by first class mail. An applicant or licensee aggrieved 8 by the determination of the department may file an appeal 9 pursuant to the provisions for administrative appeals in this 10 article. In the case of a suspension or revocation which is 11 appealed, the license shall remain valid pending a final outcome _____________________________________ 12 of the appeals process. Notwithstanding sections 274, 353(f), ______________________________________________________________ 13 408(b), 603, 702, 711-A, 802, 904, the former 1004 and 1102 of ____________________________________________________________ 14 the act or any other provision of law to the contrary, if no __________________________________________________________ 15 appeal is taken or if an appeal is taken and denied at the ______________________________________________________________ 16 conclusion of the appeal process, the department may disclose, _____________________________________________________________ 17 by publication or otherwise, the identity of a person and the _____________________________________________________________ 18 fact that the person's license has been refused, suspended or _______________________________________________________________ 19 revoked under this subsection. Disclosure may include the basis ______________________________________ 20 for refusal, suspension or revocation. 21 (c) A person that maintains a place of business in this 22 Commonwealth for the purpose of selling or leasing services or 23 tangible personal property, the sale or use of which is subject 24 to tax, without having first been licensed by the department 25 shall be guilty of a summary offense and, upon conviction 26 thereof, be sentenced to pay a fine of not less than three 27 hundred dollars ($300) nor more than one thousand five hundred 28 ($1,500) and, in default thereof, to undergo imprisonment of not 29 less than five days nor more than thirty days. The penalties 30 imposed by this subsection shall be in addition to any other 20030H0200B3160 - 4 -

____________________ 1 penalties imposed by this article. For purposes of this ____________________________________________________________ 2 subsection, the offering for sale or lease of any service or _______________________________________________________________ 3 tangible personal property, the sale or use of which is subject ____________________________________________________________ 4 to tax, during any calendar day, shall constitute a separate _____________________________________________________________ 5 violation. The Secretary of Revenue may designate employes of ________________________________________________________________ 6 the department to enforce the provisions of this subsection. The ______________________________________________________________ 7 employes shall exhibit proof of and be within the scope of the ___________________________________________________________ 8 designation when instituting proceedings as provided by the _________________________________________ 9 Pennsylvania Rules of Criminal Procedure. 10 (d) Failure of any person to obtain a license shall not 11 relieve that person of liability to pay the tax imposed by this 12 article. 13 Section 3. The act is amended by adding a section to read: _____________________________________________________________ 14 Section 281.3. Supplemental Public Transportation Assistance ________________________________________________________________ 15 Fund Transfers.--(a) One and twenty-two one hundredths per cent ______________________________________________________________ 16 (.0122) of the money collected from the tax imposed under this __________________________________________________________ 17 article, up to a maximum of ninety-one million one hundred ____________________________________________________________ 18 thousand dollars ($91,100,000) for fiscal year 2003-2004 and ___________________________________________________________ 19 seventy-five million dollars ($75,000,000) for fiscal years _________________________________________________________ 20 thereafter, shall be deposited in the Supplemental Public ________________________________________________________________ 21 Transportation Account established in the State Treasury. Within _______________________________________________________________ 22 30 days of the close of a calendar month, 1.22 per cent (.0122) __________________________________________________________ 23 of the taxes received in the prior calendar month shall be ____________________________________________________________ 24 transferred to the account. No funds in excess of ninety-one _____________________________________________________________ 25 million one hundred thousand dollars ($91,100,000) for fiscal _____________________________________________________________ 26 year 2003-2004 and seventy-five million dollars ($75,000,000) ________________________________________________________________ 27 for fiscal years thereafter may be transferred to the account in ______________________________________________________________ 28 any one fiscal year. The money in the account shall be used by ________________________________________________________ 29 the Department of Transportation for supplemental public ______________________________________________________________ 30 transportation assistance to be distributed under 74 Pa.C.S. § 20030H0200B3160 - 5 -

_________________________________________________________ 1 1310.1(b) (relating to supplemental public transportation __________________________________________________________ 2 assistance funding). Transit entities may use supplemental __________________________________________________________ 3 assistance moneys for any of the purposes enumerated in 74 _________________________________________________________ 4 Pa.C.S. § 1311 (relating to use of funds distributed). In _______________________________________________________________ 5 addition to the enumerated purposes in 74 Pa.C.S. § 1311, class ______________________________________________________________ 6 1, 2 and 3 transit entities also may use the base supplemental _____________________________________________________ 7 assistance share and any amount received by virtue of _______________________________________________________ 8 disbursements in excess of seventy-five million dollars ________________________________________________________ 9 ($75,000,000) for fiscal year 2003-2004 pursuant to this _______________________________________________________________ 10 subsection for general operations. Class 4 transit entities may ______________________________________________________________ 11 use all supplemental assistance moneys for general operations. __________________________________________________________ 12 (b) The words and phrases used in this section shall have ________________________________________________________________ 13 the meanings given to them in 74 Pa.C.S. §§ 1310(f) (relating to _______________________________________ 14 distribution of funding) and 1310.1(c). 15 Section 4. Section 301(k) of the act, amended December 23, 16 1983 (P.L.370, No.90), is amended to read: 17 Section 301. Definitions.--The following words, terms and 18 phrases when used in this article shall have the meaning 19 ascribed to them in this section except where the context 20 clearly indicates a different meaning, and, unless specifically 21 provided otherwise, any reference in this article to the 22 Internal Revenue Code of 1986 shall mean the Internal Revenue 23 Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), as 24 amended to January 1, 1997: 25 * * * 26 (k) "Income from sources within this Commonwealth" for a 27 nonresident individual, estate or trust means the same as 28 compensation, net profits, gains, dividends, interest or income 29 enumerated and classified under section 303 of this article to 30 the extent that it is earned, received or acquired from sources 20030H0200B3160 - 6 -

1 within this Commonwealth: __ 2 (1) By reason [or] of ownership or disposition of any 3 interest in real or tangible personal property in this 4 Commonwealth; or 5 (2) In connection with a trade, profession, occupation 6 carried on in this Commonwealth or for the rendition of personal 7 services performed in this Commonwealth; or 8 (3) As a distributive share of the income of an 9 unincorporated business, Pennsylvania S corporation, profession, 10 enterprise, undertaking or other activity as the result of work 11 done, services rendered or other business activities conducted 12 in this Commonwealth, except as allocated to another state 13 pursuant to regulations promulgated by the department under this 14 article; or 15 (4) From intangible personal property employed in a trade, 16 profession, occupation or business carried on in this ____ 17 Commonwealth[.]; or __________________________________________________________ 18 (5) As gambling and lottery winnings by reason of a wager _______________________________________________________________ 19 placed in this Commonwealth, the conduct of a game of chance or ___________________________________________________________ 20 other gambling activity located in this Commonwealth or the ______________________________________________________________ 21 redemption of a lottery prize from a lottery conducted in this _________________________________________________________ 22 Commonwealth, other than prizes of the Pennsylvania State ________ 23 Lottery. 24 Provided, however, That "income from sources within this 25 Commonwealth" for a nonresident individual, estate or trust 26 shall not include any items of income enumerated above received 27 or acquired from an investment company registered with the 28 Federal Securities and Exchange Commission under the Investment 29 Company Act of 1940. 30 * * * 20030H0200B3160 - 7 -

1 Section 5. Section 302 of the act, added August 4, 1991 2 (P.L.97, No.22), is amended to read: 3 Section 302. Imposition of Tax.--(a) Every resident 4 individual, estate or trust shall be subject to, and shall pay 5 for the privilege of receiving each of the classes of income 6 hereinafter enumerated in section 303, a tax upon each dollar of 7 income received by that resident during that resident's taxable 8 year at the following rates: 9 (1) Two and one-tenth per cent for taxable years commencing 10 with or within calendar year 1987 through the first half of the 11 taxable year commencing with or within calendar year 1991. 12 (2) Two and eight-tenths per cent for the second half of the 13 taxable year commencing with or within calendar year 1991 [and ________________________ 14 each taxable year thereafter] through the taxable year ____________________________________________ 15 commencing with or within calendar year 2003. 16 (3) A temporary assessment equal to an additional three- 17 tenths per cent for the second half of the taxable year 18 commencing with or within calendar year 1991 through the first 19 half of the taxable year commencing with or within calendar year 20 1992. __________________________________________________________ 21 (4) Three and twenty-five one hundredths per cent for the ________________________________________________________ 22 first half of the taxable year commencing with or within ___________________ 23 calendar year 2004. ____________________________________________________________ 24 (5) Three and one-tenth per cent for the second half of the _____________________________________________________________ 25 taxable year commencing with or within calendar year 2004 and _____________________________ 26 each taxable year thereafter. 27 (b) Every nonresident individual, estate or trust shall be 28 subject to, and shall pay for the privilege of receiving each of 29 the classes of income hereinafter enumerated in section 303 from 30 sources within this Commonwealth, a tax upon each dollar of 20030H0200B3160 - 8 -

1 income received by that nonresident during that nonresident's 2 taxable year at the following rates: 3 (1) Two and one-tenth per cent for taxable years commencing 4 with or within calendar year 1987 through the first half of the 5 taxable year commencing with or within calendar year 1991. 6 (2) Two and eight-tenths per cent for the second half of the 7 taxable year commencing with or within calendar year 1991 [and ________________________ 8 each taxable year thereafter] through the taxable year ____________________________________________ 9 commencing with or within calendar year 2003. 10 (3) A temporary assessment equal to an additional three- 11 tenths per cent for the second half of the taxable year 12 commencing with or within calendar year 1991 through the first 13 half of the taxable year commencing with or within calendar year 14 1992. __________________________________________________________ 15 (4) Three and twenty-five one hundredths per cent for the ________________________________________________________ 16 first half of the taxable year commencing with or within ___________________ 17 calendar year 2004. ____________________________________________________________ 18 (5) Three and one-tenth per cent for the second half of the _____________________________________________________________ 19 taxable year commencing with or within calendar year 2004 and _____________________________ 20 each taxable year thereafter. 21 Section 5.1. Section 304(d) of the act, amended June 29, 22 2002 (P.L.559, No.89), is amended to read: 23 Section 304. Special Tax Provisions for Poverty.--* * * 24 (d) Any claim for special tax provisions hereunder shall be 25 determined in accordance with the following: 26 (1) If the poverty income of the claimant during an entire 27 taxable year is six thousand five hundred dollars ($6,500) or 28 less, or, in the case of a married claimant, if the joint 29 poverty income of the claimant and the claimant's spouse during 30 an entire taxable year is thirteen thousand dollars ($13,000) or 20030H0200B3160 - 9 -

1 less, the claimant shall be entitled to a refund or forgiveness 2 of any moneys which have been paid over to (or would except for 3 the provisions of this act be payable to) the Commonwealth under 4 the provisions of this article, with an additional income __________________ 5 allowance of [nine thousand dollars ($9,000)] nine thousand five ________________________ ___ 6 hundred dollars ($9,500) for each dependent of the claimant for __________________________________________________ 7 taxable year 2004 and each taxable year thereafter. For purposes 8 of this subsection, a claimant shall not be considered to be 9 married if: 10 (i) The claimant and the claimant's spouse file separate 11 returns; and 12 (ii) The claimant and the claimant's spouse live apart at 13 all times during the last six months of the taxable year or are 14 separated pursuant to a written separation agreement. 15 (2) If the poverty income of the claimant during an entire 16 taxable year does not exceed the poverty income limitations 17 prescribed by clause (1) by more than the dollar category 18 contained in subclauses (i), (ii), (iii), (iv), (v), (vi), 19 (vii), (viii) or (ix) of this clause, the claimant shall be 20 entitled to a refund or forgiveness based on the per centage 21 prescribed in such subclauses of any moneys which have been paid 22 over to (or would have been except for the provisions herein be 23 payable to) the Commonwealth under this article: 24 (i) Ninety per cent if not in excess of two hundred fifty 25 dollars ($250). 26 (ii) Eighty per cent if not in excess of five hundred 27 dollars ($500). 28 (iii) Seventy per cent if not in excess of seven hundred 29 fifty dollars ($750). 30 (iv) Sixty per cent if not in excess of one thousand dollars 20030H0200B3160 - 10 -

1 ($1,000). 2 (v) Fifty per cent if not in excess of one thousand two 3 hundred fifty dollars ($1,250). 4 (vi) Forty per cent if not in excess of one thousand five 5 hundred dollars ($1,500). 6 (vii) Thirty per cent if not in excess of one thousand seven 7 hundred fifty dollars ($1,750). 8 (viii) Twenty per cent if not in excess of two thousand 9 dollars ($2,000). 10 (ix) Ten per cent if not in excess of two thousand two 11 hundred fifty dollars ($2,250). 12 (3) If an individual has a taxable year of less than twelve 13 months, the poverty income thereof shall be annualized in such 14 manner as the department may prescribe. 15 Section 6. Section 330(b)(1) of the act, amended March 26, 16 1991 (P.L.5, No.3), is amended to read: 17 Section 330. Returns and Liability.--* * * 18 (b) (1) In the case of an individual serving in the armed 19 forces of the United States in an area designated by the 20 President of the United States by Executive order as a "combat ___________________________________________________ 21 [zone"] zone," as described in section 7508 of the Internal ______________________________________________________________ 22 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 7508), as ________ 23 amended, at any time during the period designated by the 24 President by Executive order as the period of combatant 25 activities in the combat zone or hospitalized as a result of 26 injury received while serving in the combat zone during such 27 time, or an individual serving in a military capacity as a 28 result of a Federal callup to active duty or civilian capacity 29 outside the boundary of this Commonwealth in support of such 30 armed forces, the period of service in such area, plus the 20030H0200B3160 - 11 -

1 period of qualified continuous hospitalization attributable to 2 such injury, and the next one hundred eighty days thereafter 3 shall be disregarded in determining, under this article, in 4 respect of any tax liability, including any interest, penalty, 5 additional amount or addition to the tax of such individual: 6 (i) Whether any of the following acts were performed within 7 the time prescribed therefor: 8 (A) Filing any return of income tax, except income tax 9 withheld at source; 10 (B) Payment of any income tax, except income tax withheld at 11 source or any installment thereof or of any other liability to 12 the Commonwealth in respect thereof; 13 (C) Filing a petition for redetermination of a deficiency or 14 for review of a decision rendered by the department; 15 (D) Allowance of a credit or refund of any tax; 16 (E) Filing a claim for credit or refund of any tax; 17 (F) Bringing suit upon any such claim for credit or refund; 18 (G) Assessment of any tax; 19 (H) Giving or making any notice or demand for the payment of 20 any tax or with respect to any liability to the Commonwealth in 21 respect of any tax; 22 (I) Collection by the department, by levy or otherwise, of 23 the amount of any liability in respect of any tax; 24 (J) Bringing suit by the Commonwealth, or any officer on its 25 behalf, in respect of any liability in respect of any tax; and 26 (K) Any other act required or permitted under this article 27 specified in regulations prescribed by the department; 28 (ii) The amount of any credit or refund, including interest. 29 * * * 30 Section 7. Section 335 of the act is amended by adding a 20030H0200B3160 - 12 -

1 subsection to read: 2 Section 335. Requirements Concerning Returns, Notices, 3 Records and Statements.--* * * _____________________________________________________________ 4 (e) Any person who is required to make a form W-2G return to _______________________________________________________________ 5 the Secretary of the Treasury of the United States in regard to _____________________________________________________________ 6 taxable gambling or lottery winnings from sources within this ______________________________________________________________ 7 Commonwealth shall file a copy of the form with the department ________________________________________________________________ 8 by March 1 of each year or, if filed electronically, by March 31 _____________ 9 of each year. 10 Section 7.1. Section 401(1)1 of the act, amended June 29, 11 2002 (P.L.559, No.89), is amended to read: 12 Section 401. Definitions.--The following words, terms, and 13 phrases, when used in this article, shall have the meaning 14 ascribed to them in this section, except where the context 15 clearly indicates a different meaning: 16 (1) "Corporation." Any of the following: 17 (i) A corporation. 18 (ii) A joint-stock association. 19 (iii) A business trust, limited liability company or other 20 entity which for Federal income tax purposes is classified as a 21 corporation. 22 The term does not include: 23 1. A business trust which qualifies as a real estate 24 investment trust under section 856 of the Internal Revenue Code 25 of 1986 (Public Law 99-514, 26 U.S.C. § 856) or which is a 26 qualified real estate investment trust subsidiary under section 27 856(i) of the Internal Revenue Code of 1986 (26 U.S.C. § _ 28 856(i)). [or a related business trust which confines its 29 activities in this Commonwealth to the maintenance, 30 administration and management of intangible investments and 20030H0200B3160 - 13 -

1 activities of real estate investment trusts or qualified real 2 estate investment trust subsidiaries. A business trust which is 3 a qualified real estate investment trust subsidiary under 4 section 856(i) of the Internal Revenue Code of 1986 (26 U.S.C. § 5 856(i)) shall be treated as part of the real estate investment 6 trust which owns all of the stock of the qualified real estate 7 investment trust subsidiary.] 8 * * * 9 Section 7.2. Section 402.2(b) of the act, amended or added 10 June 29, 2002 (P.L.559, No.89), and December 30, 2002 (P.L.2080, 11 No.232), is amended to read: 12 Section 402.2. Interests in Unincorporated Entities.--* * * 13 (b) Subsection (a) does not apply to a corporation's 14 interest in an entity described in section 401(1)1 or section ____________________________________________________ 15 401(1)2[.] other than a real estate investment trust as defined _______________________________________________________________ 16 in section 856 of the Internal Revenue Code of 1986 (Public Law _______________________________________________________________ 17 99-514, 26 U.S.C. § 856) more than fifty per cent of the voting _____________________________________________________________ 18 power or value of the beneficial interests or shares of which _______________________________________________________________ 19 are owned, directly or indirectly, by a single corporation that _______ 20 is not: _____________________________________________________________ 21 (1) a real estate investment trust as defined in section 856 ________________________________________ 22 of the Internal Revenue Code of 1986; or ________________________________________________________ 23 (2) a qualified real estate investment trust subsidiary __________________________________________________________ 24 under section 856(i) of the Internal Revenue Code of 1986. 25 Section 8. The definition of "corporation" in section 601(a) 26 of the act, amended June 29, 2002 (P.L.559, No.89), is amended 27 to read: 28 Section 601. Definitions and Reports.--(a) The following 29 words, terms and phrases when used in this Article VI shall have 30 the meaning ascribed to them in this section, except where the 20030H0200B3160 - 14 -

1 context clearly indicates a different meaning: 2 * * * 3 "Corporation." (A) Any of the following entities: 4 (1) A corporation. 5 (2) A joint-stock association. 6 (3) A business trust. _____________ 7 (4) A limited liability company[, other than]. This clause ________ 8 excludes a restricted professional company which is subject to 9 15 Pa.C.S. Ch. 89 Subch. L (relating to restricted professional ___ 10 companies)[,] and which is deemed to be a limited partnership 11 pursuant to 15 Pa.C.S. § 8997 (relating to taxation of 12 restricted professional companies). 13 (5) An entity which for Federal income tax purposes is 14 classified as a corporation. ____________________________________________________________ 15 (6) A business trust or other entity which is a real estate __________________________________________________________ 16 investment trust as defined in section 856 of the Internal ______________________________________________________________ 17 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 856) more _______________________________________________________ 18 than fifty per cent of the voting power or value of the ______________________________________________________________ 19 beneficial interests or shares of which are owned, directly or ________________________________________________ 20 indirectly, by a single corporation that is not: _____________________________________________________________ 21 (i) a real estate investment trust as defined in section 856 ________________________________________ 22 of the Internal Revenue Code of 1986; or _________________________________________________________ 23 (ii) a qualified real estate investment trust subsidiary __________________________________________________________ 24 under section 856(i) of the Internal Revenue Code of 1986. 25 (B) The term does not include any of the following: 26 (1) A business trust which qualifies as a real estate 27 investment trust under section 856 of the Internal Revenue Code 28 of 1986 (26 U.S.C. § 856) or which is a qualified real estate 29 investment trust subsidiary under section 856(i) of the Internal _ 30 Revenue Code of 1986 (26 U.S.C. § 856(i)). [or a related 20030H0200B3160 - 15 -

1 business trust which confines its activities in this 2 Commonwealth to the maintenance, administration and management 3 of intangible investments and activities of real estate 4 investment trusts or qualified real estate investment trust 5 subsidiaries. A business trust which is a qualified real estate 6 investment trust subsidiary under section 856(i) of the Internal 7 Revenue Code of 1986 (26 U.S.C. § 856(i)) shall be treated as 8 part of the real estate investment trust which owns all of the 9 stock of the qualified real estate investment trust subsidiary.] 10 (2) A business trust which qualifies as a regulated 11 investment company under section 851 of the Internal Revenue 12 Code of 1986 (26 U.S.C. § 851) and which is registered with the 13 United States Securities and Exchange Commission under the 14 Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1 15 et seq.) or a related business trust which confines its 16 activities in this Commonwealth to the maintenance, 17 administration and management of intangible investments and 18 activities of regulated investment companies. 19 (3) A corporation, trust or other entity which is an exempt 20 organization as defined by section 501 of the Internal Revenue 21 Code of 1986 (26 U.S.C. § 501). 22 (4) A corporation, trust or other entity organized as a not- 23 for-profit organization under the laws of this Commonwealth or 24 the laws of any other state which: 25 (i) would qualify as an exempt organization as defined by 26 section 501 of the Internal Revenue Code of 1986 (26 U.S.C. § 27 501); 28 (ii) would qualify as a homeowners association as defined by 29 section 528(c) of the Internal Revenue Code of 1986 (26 U.S.C. § 30 528(c)); or 20030H0200B3160 - 16 -

1 (iii) is a membership organization subject to the Federal 2 limitations on deductions from taxable income under section 277 3 of the Internal Revenue Code of 1986 (26 U.S.C. § 277) but only 4 if no pecuniary gain or profit inures to any member or related 5 entity from the membership organization. 6 (5) A cooperative agricultural association subject to 15 7 Pa.C.S. Ch. 75 (relating to cooperative agricultural 8 associations). 9 (6) A business trust if the trust is all of the following: 10 (i) Created or managed by an entity which is subject to the 11 tax imposed by Article VII or XV or which is an affiliate of the 12 entity which shares at least eighty per cent common ownership. 13 (ii) Created and managed for the purpose of facilitating the 14 securitization of intangible assets. 15 (iii) Classified as a partnership or a disregarded entity 16 for Federal income tax purposes. 17 * * * 18 Section 9. Sections 602(h) and 607 of the act, amended or 19 added June 29, 2002 (P.L.559, No.89), are amended to read: 20 Section 602. Imposition of Tax.--* * * 21 (h) The rate of tax for purposes of the capital stock and 22 franchise tax for taxable years beginning within the dates set 23 forth shall be as follows: 24 Taxable Year Regular Rate Surtax Total Rate 25 January 1, 1971, to 26 December 31, 1986 10 mills 0 10 mills 27 January 1, 1987, to 28 December 31, 1987 9 mills 0 9 mills 29 January 1, 1988, to 30 December 31, 1990 9.5 mills 0 9.5 mills 20030H0200B3160 - 17 -

1 January 1, 1991, to 2 December 31, 1991 11 mills 2 mills 13 mills 3 January 1, 1992, to 4 December 31, 1997 11 mills 1.75 mills 12.75 mills 5 January 1, 1998, to 6 December 31, 1998 11 mills .99 mills 11.99 mills 7 January 1, 1999, to 8 December 31, 1999 10.99 mills 0 10.99 mills 9 January 1, 2000, to 10 December 31, 2000 8.99 mills 0 8.99 mills 11 January 1, 2001, to 12 December 31, 2001 7.49 mills 0 7.49 mills 13 [January 1, 2002, to 14 December 31, 2002 7.24 mills 0 7.24 mills 15 January 1, 2003, to 16 December 31, 2003 6.99 mills 0 6.99 mills 17 January 1, 2004, to 18 December 31, 2004 5.99 mills 0 5.99 mills 19 January 1, 2005, to 20 December 31, 2005 4.99 mills 0 4.99 mills 21 January 1, 2006, to 22 December 31, 2006 3.99 mills 0 3.99 mills 23 January 1, 2007, to 24 December 31, 2007 2.99 mills 0 2.99 mills 25 January 1, 2008, to 26 December 31, 2008 1.99 mills 0 1.99 mills 27 January 1, 2009, to 28 December 31, 2009 .99 mills 0 .99 mills] ___________________ 29 January 1, 2002, to _________________ __________ _ __________ 30 December 31, 2003 7.24 mills 0 7.24 mills 20030H0200B3160 - 18 -

___________________ 1 January 1, 2004, to _________________ __________ _ __________ 2 December 31, 2004 6.99 mills 0 6.99 mills ___________________ 3 January 1, 2005, to _________________ __________ _ __________ 4 December 31, 2005 5.99 mills 0 5.99 mills ___________________ 5 January 1, 2006, to _________________ __________ _ __________ 6 December 31, 2006 4.99 mills 0 4.99 mills ___________________ 7 January 1, 2007, to _________________ __________ _ __________ 8 December 31, 2007 3.99 mills 0 3.99 mills ___________________ 9 January 1, 2008, to _________________ __________ _ __________ 10 December 31, 2008 2.99 mills 0 2.99 mills ___________________ 11 January 1, 2009, to _________________ __________ _ __________ 12 December 31, 2009 1.99 mills 0 1.99 mills ___________________ 13 January 1, 2010, to _________________ __________ _ __________ 14 December 31, 2010 .99 mills 0 .99 mills 15 * * * 16 Section 607. Expiration.--This article shall expire for ____ 17 taxable years beginning after December 31, [2009] 2010. 18 Section 10. The heading of Article XI is amended to read: 19 ARTICLE XI 20 [UTILITIES] GROSS RECEIPTS TAX 21 Section 11. Section 1101(a) and (i) of the act, amended May 22 24, 2000 (P.L.106, No.23), are amended and the section is 23 amended by adding subsections to read: 24 Section 1101. Imposition of Tax.--(a) General Rule.--Every 25 pipeline company, conduit company, steamboat company, canal 26 company, slack water navigation company, transportation company, 27 and every other company, association, joint-stock association, 28 or limited partnership, now or hereafter incorporated or 29 organized by or under any law of this Commonwealth, or now or 30 hereafter organized or incorporated by any other state or by the 20030H0200B3160 - 19 -

1 United States or any foreign government, and doing business in 2 this Commonwealth, and every copartnership, person or persons 3 owning, operating or leasing to or from another corporation, 4 company, association, joint-stock association, limited 5 partnership, copartnership, person or persons, any pipeline, 6 conduit, steamboat, canal, slack water navigation, or other 7 device for the transportation of freight, passengers, baggage, 8 or oil, except motor vehicles and railroads, and every limited 9 partnership, association, joint-stock association, corporation 10 or company engaged in, or hereafter engaged in, the 11 transportation of freight or oil within this State, and every _ _____________________ 12 telephone company [and], telegraph company or provider of mobile ___________________________ 13 telecommunications services now or hereafter incorporated or 14 organized by or under any law of this Commonwealth, or now or 15 hereafter organized or incorporated by any other state or by the 16 United States or any foreign government and doing business in 17 this Commonwealth, and every limited partnership, association, 18 joint-stock association, copartnership, person or persons, ___________________ 19 engaged in telephone or telegraph business or providing mobile ___________________________ 20 telecommunications services in this Commonwealth, shall pay to 21 the State Treasurer, through the Department of Revenue, a tax of 22 forty-five mills with a surtax equal to five mills upon each 23 dollar of the gross receipts of the corporation, company or 24 association, limited partnership, joint-stock association, 25 copartnership, person or persons, received from: 26 (1) passengers, baggage, oil and freight transported wholly 27 within this State; and 28 (2) telegraph or telephone messages transmitted wholly ____________________________________ 29 within this State[,]; or telegraph or telephone messages ________________________________________________________________ 30 transmitted in interstate commerce where such messages originate 20030H0200B3160 - 20 -

__________________________________________________________ 1 or terminate in this Commonwealth and the charges for such ______________________________________________________________ 2 messages are billed to a service address in this Commonwealth; ______________________________________________________________ 3 or mobile telecommunications services messages sourced to this ___________________________________________________________ 4 Commonwealth based on the place of primary use standard set _______________________________________________________________ 5 forth in the Mobile Telecommunications Sourcing Act (4 U.S.C. § _____ 6 117); except gross receipts derived from: 7 (i) the sales of access to the Internet, as set forth in 8 Article II, made to the ultimate consumer; and 9 (ii) the sales for resale to persons, partnerships, 10 associations, corporations or political subdivisions subject to 11 the tax imposed by this article upon gross receipts derived from __________ 12 such resale of telecommunications services and mobile ___________________________ 13 telecommunications services, including: 14 (A) telecommunications exchange access to interconnect with 15 a local exchange carrier's network; [and] _____ 16 (B) network elements on an unbundled basis[.]; and _________________________________________________________ 17 (C) sales of telecommunications services to interconnect ______________________________________________________________ 18 with providers of mobile telecommunications services and sales __________________________________________________________ 19 of mobile telecommunications services to interconnect with _________________________________________ 20 providers of telecommunications services. ______________________________________________________ 21 (a.1) Credit.--Telegraph or telephone companies, or a ________________________________________________________________ 22 provider of mobile telecommunications services that pays a gross ______________________________________________________________ 23 receipts tax to another state on messages or services that are _______________________________________________________________ 24 taxable under this article are entitled to a credit against the ______________________________________________________________ 25 tax due under this article. The credit allowed with respect to ____________________________________________________________ 26 the messages shall not exceed the tax due under this article _________________________________________ 27 with respect to the messages or services. 28 * * * ____________________________________________________________ 29 (c.1) Safe harbor base year.--For purposes of the estimated ____________________________________________________________ 30 tax requirements under sections 3003.2 and 3003.3, the "safe 20030H0200B3160 - 21 -

____________________________________________________ 1 harbor base year" tax amount for providers of mobile _______________________________________________________________ 2 telecommunications services shall be the amount that would have ____________________________________________________________ 3 been required to be paid by the taxpayer if the taxpayer had ________________________________________________________________ 4 been subject to this article, apportioned for the number of days __________________________________________________________ 5 for which the tax imposed under this section is applicable ________________________ 6 during the taxable year. 7 * * * 8 (i) Itemization of Gross Receipts Tax.-- ______________________________________ 9 (1) [Interexchange] Except as provided in paragraph (2.1), _____________ 10 interexchange telecommunications carriers may surcharge and 11 disclose as a separate line item on a customer's bill all gross 12 receipts taxes imposed on interexchange telecommunications 13 carriers services performed wholly within this Commonwealth. 14 (2) For four monthly billing cycles from the effective date 15 of this act, all interexchange telecommunications carriers shall 16 provide the customer with information in the carriers' monthly 17 billing that the gross receipts line item surcharge is not a tax 18 increase, but merely a disclosure of taxes presently and 19 previously paid by the customer. __________________________________________________ 20 (2.1) Telephone companies and providers of mobile ______________________________________________________________ 21 telecommunications services may not itemize as a separate line ________________________________________________________________ 22 item or include as a separate line item on a customer's bill any _________________________________________________________ 23 gross receipts taxes imposed on mobile telecommunications __________________________________________________________ 24 services or telephone or telegraph messages transmitted in ______________________________________________________________ 25 interstate commerce subject to taxation under this article due ________________________________________ 26 to the enactment of this amendatory act. 27 (3) As used in this subsection, the term "interexchange 28 telecommunications carrier" has the meaning as defined in 66 29 Pa.C.S. § 3002 (relating to definitions). ____________________________________________________ 30 (j) Penalty for Substantial Underpayment of Initial 20030H0200B3160 - 22 -

_______________________________ 1 Estimated Gross Receipts Tax.-- ___________________________________________________________ 2 (1) If the amount of the estimated gross receipts tax paid ___________________________________________________________ 3 by the due date on account of a taxpayer's first applicable _____________________________________________________________ 4 taxable year under this article is less than seventy-five per ________________________________________________________________ 5 cent of the tax shown on the report for that taxable year or the _____________________________________________________________ 6 amount of the tax settled or resettled if that amount exceeds ________________________________________________________________ 7 the reported tax by more than ten per cent, then a penalty shall ________________________________________________________________ 8 be imposed in an amount equal to five per cent of the difference ________________________________________________________________ 9 between the tax reported or, if applicable, settled or resettled _________________________________________________________ 10 and the amount of the estimated tax paid by the due date. _____________________________________________________________ 11 (2) The penalty imposed by this subsection is in addition to ________________________________________________________ 12 any interest imposed on underpayments by section 3003.3. _____________________________________________________________ 13 (3) For the purposes of this subsection, the term "due date" ___________________________________________________________ 14 shall mean the date seventy-five days after this subsection _________________________________________________________ 15 becomes applicable or March 15, 2004, whichever is later. 16 Section 12. Section 1111-A of the act, added June 29, 2002 17 (P.L.559, No.89), is amended to read: 18 Section 1111-A. Surcharge.--(a) By August 1, 2003, and by 19 each August 1 thereafter, the Attorney General shall certify to 20 the department a report containing the total reduction of 21 liabilities, paid or unpaid, to the Commonwealth which are the 22 result of a final adjudication of litigation or a settlement of 23 litigation entered into by the Office of Attorney General for 24 claims made under this article during the prior fiscal year. 25 (b) By August 1, 2003, and by each August 1 thereafter, the 26 State Treasurer shall certify to the department a report 27 containing the total reduction of liabilities, paid or unpaid, 28 to the Commonwealth granted by the Board of Finance and Revenue 29 which are the result of a final order not appealed by the 30 department for claims made under this article during the prior 20030H0200B3160 - 23 -

1 fiscal year. 2 (c) If the total reduction of liabilities reported to the 3 department under subsections (a) and (b) exceed five million 4 dollars ($5,000,000) for the fiscal year, each entity subject to 5 the tax imposed by section 1101 shall pay to the Commonwealth a 6 surcharge upon each dollar of the gross receipts required to be ____________________________ 7 reported under section 1101, except gross receipts from ____________________________________________________________ 8 providing mobile telecommunications services or telephone or ______________________________________________________ 9 telegraph messages transmitted in interstate commerce, at the 10 rate determined in accordance with subsection (d) for the 11 following calendar year. 12 (d) The Secretary of Revenue shall establish a surcharge 13 rate by adding the total reduction in liabilities reported to 14 the department under subsections (a) and (b) and dividing the 15 sum by the total amount of taxable gross receipts reported to ____________________________ 16 the department under section 1101, except gross receipts from ____________________________________________________________ 17 providing mobile telecommunications services or telephone or ______________________________________________________ 18 telegraph messages transmitted in interstate commerce, for the 19 prior calendar year or settled by the department as of August 1 20 in the year the return is due. The surcharge rate shall be 21 rounded to four decimal places, certified by the Secretary of 22 Revenue to the Appropriations Committee of the Senate and the 23 Appropriations Committee of the House of Representatives and 24 published by the department by October 1, 2003, and by each 25 October 1 thereafter in the Pennsylvania Bulletin. 26 (e) If a surcharge is imposed for a calendar year, the 27 secretary shall require entities subject to the surcharge to 28 file a report consistent with the requirements of section 1101 29 by March 15 of that calendar year. 30 (f) The surcharge imposed by subsection (c) shall be paid 20030H0200B3160 - 24 -

1 within the time prescribed by law. Parts III, IV, V, VI and VII 2 of Article IV are incorporated by reference into this section 3 insofar as they are consistent with this section and applicable 4 to the surcharge imposed hereunder. 5 Section 13. Sections 1704-B, 1709-B(a) and 1711-B of the 6 act, added May 7, 1997 (P.L.85, No.7), are amended to read: 7 Section 1704-B. Carryover, Carryback, Refund and Assignment 8 of Credit.--(a) [The amount of the research and development tax 9 credit that a taxpayer may use against any one qualified tax 10 liability during any year may not exceed fifty per cent of such 11 qualified tax liability for that taxable year.] If the taxpayer 12 cannot use the entire amount of the research and development tax 13 credit for the taxable year in which the research and 14 development tax credit is first approved, then the excess may be 15 carried over to succeeding taxable years and used as a credit 16 against the qualified tax liability of the taxpayer for those 17 taxable years. Each time that the research and development tax 18 credit is carried over to a succeeding taxable year, it is to be 19 reduced by the amount that was used as a credit during the 20 immediately preceding taxable year. The research and development 21 tax credit provided by this article may be carried over and 22 applied to succeeding taxable years for no more than fifteen 23 taxable years following the first taxable year for which the 24 taxpayer was entitled to claim the credit. 25 (b) A research and development tax credit approved by the 26 department for Pennsylvania qualified research and development 27 expense in a taxable year first shall be applied against the 28 taxpayer's qualified tax liability for the current taxable year 29 as of the date on which the credit was approved before the 30 research and development tax credit is applied against any tax 20030H0200B3160 - 25 -

1 liability under subsection (a). __ 2 (c) A taxpayer is not entitled to carry back[,] or obtain a 3 refund of [or assign] an unused research and development tax 4 credit. ________________________________________________________ 5 (d) A taxpayer, upon application to and approval by the _____________________________________________________________ 6 Department of Community and Economic Development, may sell or ___________________________________________________________ 7 assign, in whole or in part, a research and development tax _____________________________________________________________ 8 credit granted to the taxpayer under this article if no claim _____________________________________________________________ 9 for allowance of the credit is filed within one year from the ___________________________________________________________ 10 date the credit is approved by the department under section ____________________________________________________________ 11 1703-B. The Department of Community and Economic Development ___________________________________________________________ 12 shall establish guidelines for the approval of applications ______________________ 13 under this subsection. _____________________________________________________________ 14 (e) The purchaser or assignee of a portion of a research and _____________________________________________________________ 15 development tax credit under subsection (d) shall immediately _____________________________________________________________ 16 claim the credit in the taxable year in which the purchase or ______________________________________________________________ 17 assignment is made. The amount of the research and development ___________________________________________________________ 18 credit that a purchaser or assignee may use against any one _______________________________________________________________ 19 qualified tax liability may not exceed seventy-five per cent of ________________________________________________________________ 20 such qualified tax liability for the taxable year. The purchaser ______________________________________________________________ 21 or assignee may not carry over, carry back, obtain a refund of ________________________________________________________________ 22 or assign the research and development tax credit. The purchaser ________________________________________________________ 23 or assignee shall notify the department of the seller or ______________________________________________________ 24 assignor of the research and development tax credit in _______________________________________________________ 25 compliance with procedures specified by the department. 26 Section 1709-B. Limitation on Credits.--(a) The total 27 amount of credits approved by the department shall not exceed ______________________ 28 [fifteen million dollars ($15,000,000)] thirty million dollars _____________ 29 ($30,000,000) in any fiscal year. Of that amount, [three million ________________________________ 30 dollars ($3,000,000)] six million dollars ($6,000,000) shall be 20030H0200B3160 - 26 -

1 allocated exclusively for small businesses. However, if the 2 total amounts allocated to either the group of applicants 3 exclusive of small businesses or the group of small business 4 applicants is not approved in any fiscal year, the unused 5 portion will become available for use by the other group of 6 qualifying taxpayers. 7 * * * 8 Section 1711-B. Report to General Assembly.--The secretary 9 shall submit an annual report to the General Assembly indicating 10 the effectiveness of the credit provided by this article no 11 later than March 15 following the year in which the credits were ____________ 12 approved. The report shall include the [number of] names of all 13 taxpayers utilizing the credit as of the date of the report and ________________ 14 the amount of credits approved and utilized by each taxpayer. ________________________________________________________________ 15 Notwithstanding any law providing for the confidentiality of tax ________________________________________________________________ 16 records, the information contained in the report shall be public ____________ 17 information. The report may also include any recommendations for 18 changes in the calculation or administration of the credit. 19 Section 14. The definition of "transfer of property for the 20 sole use" in section 2102 of the act, added June 29, 2002 21 (P.L.559, No.89), is amended to read: 22 Section 2102. Definitions.--The following words, terms and 23 phrases, when used in this article, shall have the meanings 24 ascribed to them in this section, except where the context 25 clearly indicates a different meaning, and, unless specifically 26 provided otherwise, any reference in this article to the 27 Internal Revenue Code of 1986 shall mean the Internal Revenue 28 Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.) as 29 amended to June 1, 2001: 30 * * * 20030H0200B3160 - 27 -

1 "Transfer of property for the sole use." A transfer to or 2 for the use of a transferee if, during the transferee's 3 lifetime, the transferee is entitled to all income and principal 4 distributions from the property and no person, including the ______________ 5 transferee, possesses [a] an inter vivos power of appointment 6 over the property. 7 * * * 8 Section 14.1. Section 3003.2(a)(5), (b)(1) and (4.2), (c)(5) 9 and (g) of the act, amended June 29, 2002 (P.L.559, No.89), are 10 amended to read: 11 Section 3003.2. Estimated Tax.--(a) The following taxpayers 12 are required to pay estimated tax: 13 * * * 14 (5) Every person subject to the tax imposed by Article XI of 15 this act shall make payments of estimated [utilities] gross 16 receipts tax during its taxable year. 17 (b) The following words, terms and phrases when used in 18 sections 3003.2 through 3003.4 of this article shall have the 19 following meanings ascribed to them: 20 (1) "Estimated tax." Estimated corporate net income tax, 21 estimated capital stock and franchise tax, estimated mutual 22 thrift institution tax, estimated insurance premiums tax, 23 estimated [utilities] gross receipts tax or estimated public 24 utility realty surcharge. 25 * * * 26 (4.2) "Estimated [utilities] gross receipts tax." The 27 amount which the taxpayer estimates as the amount of tax imposed 28 by section 1101 of Article XI for the taxable year. 29 * * * 30 (c) Estimated tax shall be paid as follows: 20030H0200B3160 - 28 -

1 * * * 2 (5) Payment of the estimated [utilities] gross receipts tax 3 shall be made in a single installment on or before the fifteenth 4 day of March of the taxable year. The remaining portion of the 5 [utilities] gross receipts tax due, if any, shall be paid upon 6 the date the annual report is required to be filed without 7 reference to any extension of time for filing the report. 8 * * * 9 (g) For all purposes of sections 3003.2 through 3003.4 of 10 this article, estimated corporate net income tax, estimated 11 capital stock and franchise tax, estimated mutual thrift 12 institutions tax, estimated insurance premiums tax, estimated 13 [utilities] gross receipts tax and estimated public utility 14 realty surcharge shall be separately reported, determined and 15 treated. 16 * * * 17 Section 15. Section 3003.3(d) of the act, amended May 7, 18 1997 (P.L.85, No.7), is amended to read: 19 Section 3003.3. Underpayment of Estimated Tax.--* * * 20 (d) Notwithstanding the provisions of the preceding 21 subsections, interest with respect to any underpayment of any 22 installment of estimated tax shall not be imposed if the total 23 amount of all payments of estimated tax made on or before the 24 last date prescribed for the payment of such installment equals 25 or exceeds the amount which would have been required to be paid 26 on or before such date if the estimated tax were an amount equal 27 to the tax computed at the rates applicable to the taxable year, 28 including any minimum tax imposed, but otherwise on the basis of 29 the facts shown on the report of the taxpayer for, and the law 30 applicable to, the safe harbor base year, adjusted for any 20030H0200B3160 - 29 -

_ ________ 1 changes to sections 401, 601 [and], 602 and 1101 enacted for the 2 taxable year, if a report showing a liability for tax was filed 3 by the taxpayer for the safe harbor base year. If the total 4 amount of all payments of estimated tax made on or before the 5 last date prescribed for the payment of such installment does 6 not equal or exceed the amount required to be paid per the 7 preceding sentence, but such amount is paid after the date the 8 installment was required to be paid, then the period of 9 underpayment shall run from the date the installment was 10 required to be paid to the date the amount required to be paid 11 per the preceding sentence is paid. Provided, that if the 12 settled tax for the safe harbor base year exceeds the tax shown 13 on such report by ten per cent or more, the settled tax adjusted 14 to reflect the current tax rate shall be used for purposes of 15 this subsection, except that, if the settled tax is subsequently 16 resettled, the amount of tax as resettled shall be utilized in 17 the application of this subsection without the necessity of the 18 filing of any petition by the department or by the taxpayer. In 19 the event that the settled or resettled tax for the safe harbor 20 base year exceeds the tax shown on the report by ten per cent or 21 more, interest resulting from the utilization of such settled or 22 resettled tax in the application of the provisions of this 23 subsection shall not be imposed if, within forty-five days of 24 the mailing date of such settlement or resettlement, payments 25 are made such that the total amount of all payments of estimated 26 tax equals or exceeds the amount which would have been required 27 to be paid on or before such date if the estimated tax were an 28 amount equal to such settled or resettled tax adjusted to 29 reflect the current tax rate. In any case in which the taxable 30 year for which an underpayment of estimated tax may exist is a 20030H0200B3160 - 30 -

1 short taxable year, in determining the tax shown on the report 2 or the settled or resettled tax for the safe harbor base year, 3 the tax will be reduced by multiplying it by the ratio of the 4 number of installment payments made in the short taxable year to 5 the number of installment payments required to be made for the 6 full taxable year. 7 Section 16. The act is amended by adding sections to read: _________________________________________________________ 8 Section 3003.15. Tax Clearance for Licenses, Permits and ______________________________________________________________ 9 Registrations.--(a) Except as set forth in subsection (c), an ___________________________________________________________ 10 applicant for the grant, renewal or transfer of any license _____________________________________________________________ 11 shall provide to the licensing agency, upon forms approved by ______________________________ 12 the department, the following: _____________________________________________________________ 13 (1) the applicant's State personal income tax identification _______ 14 number; ____________________________________________ 15 (2) the applicant's State sales tax number; __________________________________________________ 16 (3) the applicant's State corporation tax number; ___________________________________________________________ 17 (4) the applicant's State employer withholding tax number; ______________________________________________________ 18 (5) the applicant's unemployment compensation account ___________ 19 number; and ____________________________ 20 (6) a statement of whether: ________________________________________________________ 21 (i) all State tax reports have been filed and all State ___________ 22 taxes paid; ____________________________________________________________ 23 (ii) all State taxes are subject to a timely administrative ______________________ 24 or judicial appeal; or _____________________________________________________ 25 (iii) all State taxes are subject to a duly approved ______________________ 26 deferred payment plan. ___________________________________________________________ 27 (b) A license application shall be deemed to be incomplete ________________________________________________________________ 28 and a licensing agency shall not approve any application for the ______________________________________________________________ 29 grant, renewal or transfer of any license when a licensee does _______________________________________________________ 30 not provide the information required by subsection (a). 20030H0200B3160 - 31 -

_________________________________________________________ 1 (c) An applicant for the grant, renewal or transfer of a ______________________________________________________________ 2 license issued by the Pennsylvania Securities Commission shall _____________________________________________________________ 3 comply with any regulation or order adopted by the commission _________________________________________ 4 for the implementation of subsection (a). _______________________________________________________ 5 (d) Upon the filing of an application with a licensing _____________________________________________________________ 6 agency for the grant, renewal or transfer of any license, the ______________________________________________________________ 7 applicant waives any confidentiality with respect to State tax ____________________________________________________________ 8 information regarding the applicant in the possession of the _______________________________________________________________ 9 department, the Office of Attorney General or the Department of ________________________________________________________________ 10 Labor and Industry, regardless of the source of that information ________________________________________________________ 11 and consents to the provision of that information to the __________________________________________________________ 12 licensing agency by the department, the Office of Attorney ________________________________________________ 13 General or the Department of Labor and Industry. ___________________________________________________________ 14 (e) Upon receipt of any application for the grant, renewal ______________________________________________________________ 15 or transfer of any license, the licensing agency shall forward ________________________________________________________________ 16 State tax information regarding the applicant to the department, ______________________________________________________________ 17 the Office of Attorney General and the Department of Labor and _____________________________________________________________ 18 Industry. The licensing agency, the department, the Office of _____________________________________________________________ 19 Attorney General and the Department of Labor and Industry may _____________________________________________________________ 20 use reasonable parameters in determining whether an applicant ________________________________________________________________ 21 has filed required State tax reports or paid State tax due. If a ________________________________________________________________ 22 State tax is delinquent or a required report has not been filed, ______________________________________________________________ 23 the taxing agency shall issue a notice to the licensing agency ______________________________________________________________ 24 and to the licensee or applicant as provided in subsection (f) ___________________________________________________________ 25 specifying that the applicant or licensee has not filed the _________________________________________________________ 26 required return or paid a State tax. For purposes of this __________________________________________________________ 27 paragraph, a State tax is delinquent when it is subject to ________________________________________________________________ 28 collection action by the taxing agency and is neither subject to ________________________________________________________________ 29 a timely administrative or judicial appeal nor subject to a duly _________________________________ 30 authorized deferred payment plan. 20030H0200B3160 - 32 -

____________________________________________________________ 1 (f) Notice to licensee or applicant for license or transfer _______________________________ 2 of license shall be as follows: _________________________________________________________ 3 (1) Prior to the issuance of an order to suspend, to not ______________________________________________________________ 4 renew or to deny a license, the applicable taxing agency shall ___________________________________________________________ 5 provide notice to the applicant or licensee as set forth in ________________________________________ 6 subsection (e). The notice must specify: __________________________________________________________ 7 (i) Any reports which must be filed and any amounts owed. ______________________________________________________ 8 (ii) How, when and where the notice can be contested. ___________________________________________________________ 9 (iii) Where payment may be made in order to cure the State ________________________________________________________________ 10 tax delinquency or whom the individual may contact to attempt to _________________________ 11 establish a payment plan. ____________________________________________________________ 12 (iv) That the grounds for contesting the notice are limited _____________________________________ 13 to mistaken identity of the licensee. ________________________________________________________ 14 (v) That an order to deny an application for license or ____________________________________________________________ 15 transfer or automatically suspend the license will be issued _______________________________________________________ 16 forty-five days after issuance of the notice unless the ______________________________________________________________ 17 delinquent report is filed, the State tax is paid or a payment _________________________________________________ 18 plan is approved by the applicable taxing agency. _____________________________________________________________ 19 (2) An agreement providing for a periodic payment plan shall ____________________________________________________________ 20 specify that failure to comply with the schedule of payments ______________________________________________________________ 21 shall result in the immediate suspension, nonrenewal or denial __________________________________________________ 22 of the license without further right to a hearing. ________________________________________________________ 23 (3) To contest the notice or obtain a payment plan, the _______________________________________________________________ 24 licensee or applicant must contact the applicable taxing agency ____________________________________________________________ 25 not later than twenty days after issuance of the notice. The _____________________________________________________________ 26 grounds for contesting shall be limited to mistaken identity. _______________________________________________________________ 27 If, as determined by the taxing agency, a mistake has occurred, ________________________________________________________________ 28 the notice provided to the licensing agency under subsection (e) _______________________________________________________ 29 shall be modified accordingly within twenty days of the __________________________________________ 30 appropriate taxing agency being contacted. 20030H0200B3160 - 33 -

___________________________________________________ 1 (g) A person that practices a trade, profession or ____________________________________________________________ 2 occupation or conducts a business activity without a license ________________________________________________________________ 3 under this section shall be guilty of a misdemeanor. The penalty ____________________________________________________________ 4 imposed under this section shall be in addition to any other _______________________ 5 penalty imposed by law. _______________________________________________________ 6 (h) If during the effective period of any license, the ______________________________________________________________ 7 licensee fails to file any required State tax report, fails to ___________________________________________________________ 8 pay any collectible State tax due or defaults in a deferred _______________________________________________________________ 9 payment plan, the department, the Office of Attorney General or __________________________________________________________ 10 the Department of Labor and Industry, after complying with ___________________________________________________________ 11 subsection (f), may notify the licensing agency which shall ________________________________________________________ 12 suspend or not renew any license issued to the licensee. ________________________________________________________________ 13 Notwithstanding the provisions of any other statute, the license _____________________________________________________________ 14 suspension or nonrenewal shall be for an indefinite period of ____________________________________________________________ 15 time and shall remain in effect until the licensee files the ______________________________________________________________ 16 required reports, pays the State tax due or cures the deferred _____________________ 17 payment plan default. ___________________________________________________________ 18 (i) The appropriate taxing agency may stay the process for _________________________________________________________ 19 suspension, nonrenewal or denial beyond the notice period ________________________________________________________________ 20 specified in subsection (f)(1)(v) if additional time is required _________________________________________________________ 21 for it to process a case or reach a payment plan with the ________________________________________________________________ 22 licensee. The taxing agency shall notify the licensing agency of ________________________________________________________________ 23 the intent to stay the suspension, nonrenewal or denial at least _______________________________________________________ 24 five working days before the notice period has expired. _______________________________________________________ 25 (j) A licensing agency may make a determination that a ______________________________________________________________ 26 license is vital to prevent an immediate threat to the health, ____________________________________________________________ 27 safety and welfare of the public. The licensing agency shall ____________________________________________________________ 28 notify the applicable taxing agency of the determination. If ____________________________________________________________ 29 this determination is made, the licensing agency may use its ______________________________________________________________ 30 discretion to renew a license or not suspend a license but may 20030H0200B3160 - 34 -

________________________________________________________________ 1 not grant a license to a new applicant until the applicant files _________________________________________________________ 2 the required reports, pays the State tax due or cures the ______________________________ 3 deferred payment plan default. ____________________________________________________________ 4 (k) The provisions of this section shall also be applicable ____________________________________________________ 5 to any management company utilized by the applicant. _____________________________________________________________ 6 (l) For the purpose of this section, the following words and ________________________________________________________________ 7 phrases shall have the meanings given to them in this subsection _______________________________________________ 8 unless the context clearly indicates otherwise: _____________________________________________________________ 9 "Applicant." A person that applies to a licensing agency for _______________________________________________________________ 10 a license or applies for renewal or in the case of the transfer _________________________________________________________ 11 of an existing license, the transferor or the transferee. _____________________________________________________________ 12 "Department." The Department of Revenue of the Commonwealth. ________________________________________________________ 13 "License." A license, permit or registration granted or ______________________________________________________________ 14 issued by a licensing agency that confers benefits, privileges _________________________________________________________ 15 or rights to the licensee, permit holder or registrant to __________________________________________________________ 16 practice a trade, profession or occupation or to conduct a ___________________________________________ 17 business activity within this Commonwealth. ___________________________________________________ 18 "Licensing agency." The Department of Revenue, the ___________________________________________________ 19 Department of Labor and Industry, the Department of ________________________________________________________ 20 Environmental Protection, the Department of Banking, the ____________________________________________________ 21 Department of State, the Insurance Department or the ___________________________________ 22 Pennsylvania Securities Commission. __________________________________________________________ 23 "State tax." A tax liability, including interest, penalty _______________________________________________________________ 24 and additions of a taxpayer, licensee, employer or other person ________________________________________________________ 25 imposed under this act, the act of December 5, 1936 (2nd __________________________________________________________ 26 Sp.Sess., 1937 P.L.2897, No.1), known as the "Unemployment _______________________________________________________________ 27 Compensation Law," or 75 Pa.C.S. § 9014 (relating to collection _________________ 28 of unpaid taxes). _____________________________________________________________ 29 "Taxing agency." The Department of Revenue or the Department ______________________ 30 of Labor and Industry. 20030H0200B3160 - 35 -

____________________________________________________________ 1 Section 3003.16. Authority to Attach Wages, Commissions and _____________________________________________________________ 2 Other Earnings.--(a) The Department of Revenue may, upon the _______________________________________________________________ 3 presentation of a written notice and demand certifying that the _______________________________________________________________ 4 information contained within is true and correct and containing _______________________________________________________________ 5 the name of the taxpayer and the amount of delinquent State tax ________________________________________________________________ 6 due plus the department's costs, demand, receive and collect the _______________________ 7 amount from any entity: _______________________________________________________ 8 (1) employing persons owing delinquent State taxes; or ____________________________________________________________ 9 (2) having in its possession unpaid commissions or earnings ________________________________________________________________ 10 belonging to any person or persons owing delinquent State taxes. ___________________________________________________________ 11 (b) Subject to the limitations in subsection (c), upon the _____________________________________________________________ 12 receipt of a written notice and demand pursuant to subsection ___________________________________________________________ 13 (a), an entity shall deduct from the wages of an individual ____________________________________________________________ 14 employe the amount shown on the notice and shall forward the _______________________________________________________________ 15 amount to the department within sixty days after receipt of the _______ 16 notice. ____________________________________________________________ 17 (c) No more than ten per cent of the wages of an individual _______________________________________________________________ 18 employe who is a delinquent taxpayer may be deducted at any one ________________________________________________________ 19 time for delinquent State taxes and costs. The entity is ________________________________________________________________ 20 entitled to deduct from the amount collected from the individual ______________________________________________________ 21 employe the costs incurred by the entity for the extra ____________________________________________________________ 22 bookkeeping necessary to record the transactions, but not to _______________________________________________________________ 23 exceed two per cent of the amount collected from the individual ________ 24 employe. __________________________________________________________ 25 (d) Upon the failure of an entity to deduct or forward an _________________________________________________________ 26 amount required under this section within the time period ______________________________________________________________ 27 required under subsection (b), the entity shall pay the amount _________________________________________________________ 28 of the delinquent State tax and costs for each individual ___________________________________________________________ 29 employe who is a delinquent taxpayer subject to a demand in _____________________________________________________________ 30 addition to a penalty of ten per cent of the delinquent State 20030H0200B3160 - 36 -

_____________________________________________________________ 1 tax and costs. An entity paying delinquent taxes, costs and a ______________________________________________________________ 2 penalty pursuant to this subsection shall not have the benefit __________________________________________ 3 of any stay of execution or exemption law. _________________________________________________________ 4 (e) The following words, terms and phrases, when used in _____________________________________________________________ 5 this section, shall have the meaning ascribed to them in this _______________________________________________________________ 6 section, except where the context clearly indicates a different ________ 7 meaning: ____________________________________________________________ 8 "Entity." The United States, the Commonwealth or any of its ________________________________________________________ 9 political subdivisions, a corporation, an association, a _________________________________ 10 company, a firm or an individual. _____________________________________________________________ 11 "Wages." Any wages, commissions or earnings of an individual ________ 12 employe: ________________________________________________________ 13 (1) which are currently owed to the individual employe; _____________________________________________________________ 14 (2) which shall become due within sixty days of receipt of a _____________________________________________________ 15 written notice and demand pursuant to subsection (b); ________________________________________________________ 16 (3) any unpaid commissions or earnings of an individual ______________________________________ 17 employe in the entity's possession; or ________________________________________________________ 18 (4) any unpaid commissions or earnings of an individual ____________________________________________________________ 19 employe that comes into the entity's possession within sixty __________________________________________________________ 20 days of receipt of a written notice and demand pursuant to _______________ 21 subsection (a). __________________________________________________ 22 Section 3003.17. Keystone Opportunity Zones.--(a) ______________________________________________________________ 23 Notwithstanding section 301.1(e) of the act of October 6, 1998 _____________________________________________________________ 24 (P.L.705, No.92), known as the "Keystone Opportunity Zone and _______________________________________________________________ 25 Keystone Opportunity Expansion Zone Act," the last date for the ________________________________________________________________ 26 passing of ordinances, resolutions or other required action of a ______________________________________________________________ 27 qualified political subdivision seeking to enhance the size of ________________________________________________________________ 28 an approved expansion subzone within its jurisdiction under that _____________________________________________________________ 29 act for the tax exemptions, deductions, abatements or credits ______________________________________________________________ 30 set forth in Chapters 5 and 7 of that act shall be ninety days 20030H0200B3160 - 37 -

_________________________________________ 1 after the effective date of this section. ______________________________________________________ 2 (b) Notwithstanding section 301.2(c) of the "Keystone ______________________________________________________________ 3 Opportunity Zone and Keystone Opportunity Expansion Zone Act," ___________________________________________________________ 4 the last date for the filing by a political subdivision for ____________________________________________________________ 5 approval of the designation of a deteriorated property as an __________________________________________________________ 6 improvement subzone under that act for the tax exemptions, _______________________________________________________________ 7 deductions, abatements or credits set forth in Chapters 5 and 7 __________________________________________________________ 8 of that act shall be two hundred and twenty days after the _______________________________ 9 effective date of this section. ____________________________________________________ 10 (c) Notwithstanding section 303(a) of the "Keystone ______________________________________________________________ 11 Opportunity Zone and Keystone Opportunity Expansion Zone Act," ______________________________________________________ 12 an application for enhancement of an existing keystone _______________________________________________________ 13 opportunity zone or of an existing keystone opportunity _____________________________________________________ 14 expansion zone under that act for the tax exemptions, _______________________________________________________________ 15 deductions, abatements or credits set forth in Chapters 5 and 7 ______________________________________________________________ 16 of that act must be received by the department by December 31, _____ 17 2003. ____________________________________________________ 18 (d) Notwithstanding section 303(c) of the "Keystone ______________________________________________________________ 19 Opportunity Zone and Keystone Opportunity Expansion Zone Act," ___________________________________________________________ 20 the department shall designate all enhancements to existing _____________________________________________________________ 21 keystone opportunity zones and keystone opportunity expansion ________________________________________________________ 22 zones under that act for the tax exemptions, deductions, _______________________________________________________________ 23 abatements or credits set forth in Chapters 5 and 7 of that act __________________ 24 by March 30, 2004. _____________________________________________________________ 25 (e) As used in this section, the following words and phrases _________________________________________________________ 26 shall have the meanings given to them in this subsection: _______________________________________________________ 27 "Department." The Department of Community and Economic ________________________________ 28 Development of the Commonwealth. __________________________________________________________ 29 "Deteriorated property." As defined in section 103 of the _____________________________________________________________ 30 "Keystone Opportunity Zone and Keystone Opportunity Expansion 20030H0200B3160 - 38 -

__________ 1 Zone Act." ______________________________________________________ 2 "Expansion subzone." As defined in section 103 of the _____________________________________________________________ 3 "Keystone Opportunity Zone and Keystone Opportunity Expansion __________ 4 Zone Act." _____________________________________________________ 5 "Improvement zone." As defined in section 103 of the _____________________________________________________________ 6 "Keystone Opportunity Zone and Keystone Opportunity Expansion __________ 7 Zone Act." _____________________________________________________________ 8 "Keystone opportunity expansion zone." As defined in section ______________________________________________________________ 9 103 of the "Keystone Opportunity Zone and Keystone Opportunity ____________________ 10 Expansion Zone Act." __________________________________________________________ 11 "Keystone opportunity zone." As defined in section 103 of _______________________________________________________ 12 the "Keystone Opportunity Zone and Keystone Opportunity ____________________ 13 Expansion Zone Act." __________________________________________________________ 14 "Political subdivision." As defined in section 103 of the _____________________________________________________________ 15 "Keystone Opportunity Zone and Keystone Opportunity Expansion __________ 16 Zone Act." _____________________________________________________________ 17 "Qualified political subdivision." As defined in section 103 __________________________________________________________ 18 of the "Keystone Opportunity Zone and Keystone Opportunity ____________________ 19 Expansion Zone Act." 20 Section 17. The following shall apply: 21 (1) Upon his determination of need, the Governor may 22 certify simultaneously to the President pro tempore of the 23 Senate, the Speaker of the House of Representatives and the 24 Secretary of Revenue that the balance in the Budget 25 Stabilization Reserve Fund is less than $500,000 and that 26 revenues from the taxes authorized by the amendment of 27 section 1101 of the act are necessary to uphold the 28 Commonwealth's constitutional responsibility to provide for 29 the maintenance and support of a thorough and efficient 30 system of public education. Upon the Governor's 20030H0200B3160 - 39 -

1 certification, the Secretary of Revenue shall certify the 2 date that the taxes on the providers of interstate telephone 3 service and mobile telecommunications service authorized 4 under the amendment of section 1101 of the act shall apply. 5 The certified date shall be as soon as practicable following 6 certification of the Governor, but in no event before January 7 1, 2004. 8 (2) A notice of the Secretary of Revenue's certification 9 shall be published in the Pennsylvania Bulletin. 10 Section 18. The following acts and parts of acts are 11 repealed: 12 (1) Section 1702-A(b) of the act of April 9, 1929 13 (P.L.343, No.176), known as The Fiscal Code. 14 (2) The provisions of 74 Pa.C.S. § 1310.1(a). 15 Section 19. This act shall apply as follows: 16 (1) The amendment of section 201(d)(17) of the act shall 17 apply to sales at retail or uses occurring on or after the 18 date certified by the Secretary of Revenue under section 17 19 of this act. 20 (2) The amendment of section 301(k) of the act shall 21 apply to taxable years beginning after December 31, 2003. 22 (3) The amendment of section 330 of the act shall apply 23 retroactively to taxable years beginning after December 31, 24 2001. 25 (4) The amendment of section 335 of the act shall apply 26 to taxable years beginning after December 31, 2003. 27 (4.1) The amendment of section 401(1)1 of the act shall 28 apply retroactively to June 29, 2002, and shall be considered 29 as a codification of the law then in effect. 30 (4.2) The amendment of section 402.2(b) of the act shall 20030H0200B3160 - 40 -

1 apply to tax years beginning on or after the effective date 2 of this paragraph. 3 (5) (i) The amendment of the definition of 4 "corporation" in section 601(a)(4) of the act shall apply 5 retroactively to June 29, 2002, and shall be considered 6 as a codification of the law then in effect. 7 (ii) The addition of section 601(a)(6) of the act 8 shall apply to tax years beginning on or after the 9 effective date of this paragraph. 10 (iii) The amendment of section 601(b)(1) of the act 11 shall apply retroactively to June 29, 2002, and shall be 12 considered as a codification of the law then in effect. 13 (6) The amendment of section 1101 of the act shall apply 14 to gross receipts derived from transactions occurring on or 15 after the date certified by the Secretary of Revenue under 16 section 17 of this act. 17 (7) The amendment of section 1704-B(a) of the act shall 18 apply to taxable years beginning after December 31, 2003. 19 (8) The amendment or addition of section 1704-B(c), (d) 20 and (e) of the act shall apply to credits awarded after 21 December 31, 2002. 22 (9) The amendment of section 1709-B(a) of the act shall 23 apply to credits awarded after December 31, 2003. 24 (10) The amendment of section 1711-B of the act shall 25 apply to credits awarded after December 31, 2002. 26 (11) Section 18(1)(repeal of section 1702-A(b) of The 27 Fiscal Code) of this act shall apply retroactively to June 28 30, 2003. 29 (12) The amendment of the definition of "transfer of 30 property for the sole use" in section 2102 of the act shall 20030H0200B3160 - 41 -

1 apply retroactively to June 29, 2002. 2 (13) The addition of section 3003.15 of the act shall 3 apply to applications for the grant, renewal or transfer of 4 any license received more than 60 days after the effective 5 date of this section. 6 Section 20. This act shall take effect immediately. 7 SECTION 1. SECTION 201(D) OF THE ACT OF MARCH 4, 1971 < 8 (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, IS AMENDED 9 BY ADDING A SUBCLAUSE AND THE SECTION IS AMENDED BY ADDING A 10 CLAUSE TO READ: 11 SECTION 201. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND 12 PHRASES WHEN USED IN THIS ARTICLE II SHALL HAVE THE MEANING 13 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT 14 CLEARLY INDICATES A DIFFERENT MEANING: 15 * * * 16 (D) "PROCESSING." THE PERFORMANCE OF THE FOLLOWING 17 ACTIVITIES WHEN ENGAGED IN AS A BUSINESS ENTERPRISE: 18 * * * __________________________________________________________ 19 (17) THE PRODUCING OF MOBILE TELECOMMUNICATIONS SERVICES. 20 * * * ____________________________________________________ 21 (DDD) "CALL CENTER." THE PHYSICAL LOCATION IN THIS _____________ 22 COMMONWEALTH: ______________________________________________________ 23 (1) WHERE AT LEAST ONE HUNDRED AND FIFTY EMPLOYES ARE _______________________________________________ 24 EMPLOYED TO INITIATE OR ANSWER TELEPHONE CALLS; __________________________________________________________ 25 (2) WHERE THERE ARE AT LEAST TWO HUNDRED TELEPHONE LINES; ___ 26 AND _____________________________________________________________ 27 (3) WHICH UTILIZES AN AUTOMATED CALL DISTRIBUTION SYSTEM FOR ________________________________________________________ 28 CUSTOMER TELEPHONE CALLS IN ONE OR MORE OF THE FOLLOWING ___________ 29 ACTIVITIES: __________________________________ 30 (A) CUSTOMER SERVICE AND SUPPORT; 20030H0200B3160 - 42 -

__________________________ 1 (B) TECHNICAL ASSISTANCE; _______________________ 2 (C) HELP DESK SERVICE; ___________________________ 3 (D) PROVIDING INFORMATION; ________________________ 4 (E) CONDUCTING SURVEYS; ____________________________ 5 (F) REVENUE COLLECTIONS; OR ______________________________________ 6 (G) RECEIVING ORDERS OR RESERVATIONS. ____________________________________________________________ 7 FOR PURPOSES OF THIS CLAUSE, A PHYSICAL LOCATION MAY INCLUDE _____________________________________________________________ 8 MULTIPLE BUILDINGS UTILIZED BY A TAXPAYER LOCATED WITHIN THIS _____________ 9 COMMONWEALTH. 10 SECTION 2. SECTION 204 OF THE ACT IS AMENDED BY ADDING A 11 CLAUSE TO READ: 12 SECTION 204. EXCLUSIONS FROM TAX.--THE TAX IMPOSED BY 13 SECTION 202 SHALL NOT BE IMPOSED UPON ANY OF THE FOLLOWING: 14 * * * ____________________________________________________ 15 (64) THE SALE AT RETAIL TO OR USE BY A CONSTRUCTION ______________________________________________________________ 16 CONTRACTOR, EMPLOYED BY A PUBLIC SCHOOL DISTRICT PURSUANT TO A ______________________________________________________________ 17 CONSTRUCTION CONTRACT, OF ANY MATERIALS AND BUILDING SUPPLIES, ______________________________________________________________ 18 WHICH, DURING CONSTRUCTION OR RECONSTRUCTION, ARE MADE PART OF _______________________________________________________________ 19 ANY PUBLIC SCHOOL BUILDING UTILIZED FOR INSTRUCTIONAL CLASSROOM __________________________________________________________ 20 EDUCATION WITHIN THIS COMMONWEALTH, IF THE CONSTRUCTION OR _______________ 21 RECONSTRUCTION: ___________________________________________________________ 22 (I) IS NECESSITATED BY A DISASTER EMERGENCY, AS DEFINED IN ________________________________________________ 23 35 PA.C.S. § 7102 (RELATING TO DEFINITIONS); AND ___________________________________________________ 24 (II) TAKES PLACE DURING THE PERIOD WHEN THERE IS A ____________________________________________________________ 25 DECLARATION OF DISASTER EMERGENCY UNDER 35 PA.C.S. § 7301(C) ____________________________________________ 26 (RELATING TO GENERAL AUTHORITY OF GOVERNOR). 27 SECTION 3. SECTION 206 OF THE ACT, AMENDED SEPTEMBER 9, 1971 28 (P.L.437, NO.105), IS AMENDED TO READ: ___ 29 SECTION 206. CREDIT AGAINST TAX.--(A) A CREDIT AGAINST THE ___________ 30 TAX IMPOSED BY [THIS ACT] SECTION 202 SHALL BE GRANTED WITH 20030H0200B3160 - 43 -

1 RESPECT TO TANGIBLE PERSONAL PROPERTY OR SERVICES PURCHASED FOR 2 USE OUTSIDE THE COMMONWEALTH EQUAL TO THE TAX PAID TO ANOTHER 3 STATE BY REASON OF THE IMPOSITION BY SUCH OTHER STATE OF A TAX 4 SIMILAR TO THE TAX IMPOSED BY THIS ARTICLE: PROVIDED, HOWEVER, 5 THAT NO SUCH CREDIT SHALL BE GRANTED UNLESS SUCH OTHER STATE 6 GRANTS SUBSTANTIALLY SIMILAR TAX RELIEF BY REASON OF THE PAYMENT 7 OF TAX UNDER THIS ARTICLE OR UNDER THE TAX ACT OF 1963 FOR 8 EDUCATION. _______________________________________________________ 9 (B) A CREDIT AGAINST THE TAX IMPOSED BY SECTION 202 ON _____________________________________________________________ 10 TELECOMMUNICATIONS SERVICES SHALL BE GRANTED TO A CALL CENTER _________________________________________________________ 11 FOR GROSS RECEIPTS TAX PAID BY A TELEPHONE COMPANY ON THE _______________________________________________________ 12 RECEIPTS DERIVED FROM THE SALE OF INCOMING AND OUTGOING _______________________________________________________________ 13 INTERSTATE TELECOMMUNICATIONS SERVICES TO THE CALL CENTER UNDER ________________________________________ 14 SECTION 1101(A)(2). THE FOLLOWING APPLY: ___________________________________________________________ 15 (1) A TELEPHONE COMPANY, UPON REQUEST, SHALL NOTIFY A CALL ________________________________________________________________ 16 CENTER OF THE AMOUNT OF GROSS RECEIPTS TAX PAID BY THE TELEPHONE _____________________________________________________________ 17 COMPANY ON THE RECEIPTS DERIVED FROM THE SALE OF INCOMING AND ___________________________________________________________ 18 OUTGOING INTERSTATE TELECOMMUNICATIONS SERVICES TO THE CALL _______ 19 CENTER. __________________________________________________________ 20 (2) A CALL CENTER THAT IS ELIGIBLE FOR THE CREDIT IN THIS __________________________________________________________ 21 SUBSECTION MAY APPLY FOR A TAX CREDIT AS SET FORTH IN THIS ___________ 22 SUBSECTION. _____________________________________________________________ 23 (3) BY FEBRUARY 15, A TAXPAYER MUST SUBMIT AN APPLICATION TO __________________________________________________________ 24 THE DEPARTMENT FOR GROSS RECEIPTS TAX PAID ON THE RECEIPTS _________________________________________________________ 25 DERIVED FROM THE SALE OF INCOMING AND OUTGOING INTERSTATE ________________________________________________________________ 26 TELECOMMUNICATIONS SERVICES INCURRED IN THE PRIOR CALENDAR YEAR. ____________________________________________________________ 27 (4) BY APRIL 15 OF THE CALENDAR YEAR FOLLOWING THE CLOSE OF _________________________________________________________ 28 THE CALENDAR YEAR DURING WHICH THE GROSS RECEIPTS TAX WAS __________________________________________________________ 29 INCURRED, THE DEPARTMENT SHALL NOTIFY THE APPLICANT OF THE ________________________________________________________________ 30 AMOUNT OF THE APPLICANT'S TAX CREDIT APPROVED BY THE DEPARTMENT. 20030H0200B3160 - 44 -

_________________________________________________________ 1 (5) THE TOTAL AMOUNT OF TAX CREDITS PROVIDED FOR IN THIS __________________________________________________________ 2 SUBSECTION AND APPROVED BY THE DEPARTMENT SHALL NOT EXCEED _______________________________________________________________ 3 THIRTY MILLION DOLLARS ($30,000,000) IN ANY FISCAL YEAR. IF THE _________________________________________________________ 4 TOTAL AMOUNT OF TAX CREDITS APPLIED FOR BY ALL APPLICANTS _______________________________________________________________ 5 EXCEEDS THE AMOUNT ALLOCATED FOR THOSE CREDITS, THEN THE CREDIT ________________________________________________________________ 6 TO BE RECEIVED BY EACH APPLICANT SHALL BE DETERMINED AS FOLLOWS: ____________ 7 (I) DIVIDE: ____________________________________________________ 8 (A) THE TAX CREDIT APPLIED FOR BY THE APPLICANT; BY ___________________________________________________ 9 (B) THE TOTAL OF ALL TAX CREDITS APPLIED FOR BY ALL ___________ 10 APPLICANTS. _______________ 11 (II) MULTIPLY: ____________________________________________ 12 (A) THE QUOTIENT UNDER SUBPARAGRAPH (I); BY ______________________________________________ 13 (B) THE AMOUNT ALLOCATED FOR ALL TAX CREDITS. 14 SECTION 4. SECTION 208 OF THE ACT, AMENDED AUGUST 4, 1991 15 (P.L.97, NO.22), JUNE 16, 1994 (P.L.279, NO.48), JUNE 30, 1995 16 (P.L.139, NO.21), AND JUNE 29, 2002 (P.L.559, NO.89), IS AMENDED 17 TO READ: 18 SECTION 208. LICENSES.--(A) EVERY PERSON MAINTAINING A 19 PLACE OF BUSINESS IN THIS COMMONWEALTH, SELLING OR LEASING 20 SERVICES OR TANGIBLE PERSONAL PROPERTY, THE SALE OR USE OF WHICH 21 IS SUBJECT TO TAX AND WHO HAS NOT HITHERTO OBTAINED A LICENSE 22 FROM THE DEPARTMENT, SHALL, PRIOR TO THE BEGINNING OF BUSINESS 23 THEREAFTER, MAKE APPLICATION TO THE DEPARTMENT, ON A FORM 24 PRESCRIBED BY THE DEPARTMENT, FOR A LICENSE. IF SUCH PERSON 25 MAINTAINS MORE THAN ONE PLACE OF BUSINESS IN THIS COMMONWEALTH, 26 THE LICENSE SHALL BE ISSUED FOR THE PRINCIPAL PLACE OF BUSINESS 27 IN THIS COMMONWEALTH. 28 (B) THE DEPARTMENT SHALL, AFTER THE RECEIPT OF AN 29 APPLICATION, ISSUE THE LICENSE APPLIED FOR UNDER SUBSECTION (A) 30 OF THIS SECTION, PROVIDED SAID APPLICANT SHALL HAVE FILED ALL 20030H0200B3160 - 45 -

1 REQUIRED STATE TAX REPORTS AND PAID ANY STATE TAXES NOT SUBJECT 2 TO A TIMELY PERFECTED ADMINISTRATIVE OR JUDICIAL APPEAL OR 3 SUBJECT TO A DULY AUTHORIZED DEFERRED PAYMENT PLAN. SUCH LICENSE 4 SHALL BE NONASSIGNABLE. ALL LICENSEES AS OF THE EFFECTIVE DATE 5 OF THIS SUBSECTION SHALL BE REQUIRED TO FILE FOR RENEWAL OF SAID 6 LICENSE ON OR BEFORE JANUARY 31, 1992. LICENSES ISSUED THROUGH 7 APRIL 30, 1992, SHALL BE BASED ON A STAGGERED RENEWAL SYSTEM 8 ESTABLISHED BY THE DEPARTMENT. THEREAFTER, ANY LICENSE ISSUED 9 SHALL BE VALID FOR A PERIOD OF FIVE YEARS. 10 (B.1) IF AN APPLICANT FOR A LICENSE OR ANY PERSON HOLDING A 11 LICENSE HAS NOT FILED ALL REQUIRED STATE TAX REPORTS AND PAID 12 ANY STATE TAXES NOT SUBJECT TO A TIMELY PERFECTED ADMINISTRATIVE 13 OR JUDICIAL APPEAL OR SUBJECT TO A DULY AUTHORIZED DEFERRED 14 PAYMENT PLAN, THE DEPARTMENT MAY REFUSE TO ISSUE, MAY SUSPEND OR 15 MAY REVOKE SAID LICENSE. THE DEPARTMENT SHALL NOTIFY THE 16 APPLICANT OR LICENSEE OF ANY REFUSAL, SUSPENSION OR REVOCATION. _______________________________________________________ 17 SUCH NOTICE SHALL CONTAIN A STATEMENT THAT THE REFUSAL, ____________________________________________ 18 SUSPENSION OR REVOCATION MAY BE MADE PUBLIC. SUCH NOTICE SHALL 19 BE MADE BY FIRST CLASS MAIL. AN APPLICANT OR LICENSEE AGGRIEVED 20 BY THE DETERMINATION OF THE DEPARTMENT MAY FILE AN APPEAL 21 PURSUANT TO THE PROVISIONS FOR ADMINISTRATIVE APPEALS IN THIS 22 ARTICLE. IN THE CASE OF A SUSPENSION OR REVOCATION WHICH IS 23 APPEALED, THE LICENSE SHALL REMAIN VALID PENDING A FINAL OUTCOME _____________________________________ 24 OF THE APPEALS PROCESS. NOTWITHSTANDING SECTIONS 274, 353(F), ___________________________________________________________ 25 408(B), 603, 702, 802, 904 AND 1102 OF THE ACT OR ANY OTHER ________________________________________________________________ 26 PROVISION OF LAW TO THE CONTRARY, IF NO APPEAL IS TAKEN OR IF AN __________________________________________________________ 27 APPEAL IS TAKEN AND DENIED AT THE CONCLUSION OF THE APPEAL _______________________________________________________ 28 PROCESS, THE DEPARTMENT MAY DISCLOSE, BY PUBLICATION OR _________________________________________________________ 29 OTHERWISE, THE IDENTITY OF A PERSON AND THE FACT THAT THE _____________________________________________________________ 30 PERSON'S LICENSE HAS BEEN REFUSED, SUSPENDED OR REVOKED UNDER 20030H0200B3160 - 46 -

______________________________________________________________ 1 THIS SUBSECTION. DISCLOSURE MAY INCLUDE THE BASIS FOR REFUSAL, _________________________ 2 SUSPENSION OR REVOCATION. 3 (C) A PERSON THAT MAINTAINS A PLACE OF BUSINESS IN THIS 4 COMMONWEALTH FOR THE PURPOSE OF SELLING OR LEASING SERVICES OR 5 TANGIBLE PERSONAL PROPERTY, THE SALE OR USE OF WHICH IS SUBJECT 6 TO TAX, WITHOUT HAVING FIRST BEEN LICENSED BY THE DEPARTMENT 7 SHALL BE GUILTY OF A SUMMARY OFFENSE AND, UPON CONVICTION 8 THEREOF, BE SENTENCED TO PAY A FINE OF NOT LESS THAN THREE 9 HUNDRED DOLLARS ($300) NOR MORE THAN ONE THOUSAND FIVE HUNDRED 10 ($1,500) AND, IN DEFAULT THEREOF, TO UNDERGO IMPRISONMENT OF NOT 11 LESS THAN FIVE DAYS NOR MORE THAN THIRTY DAYS. THE PENALTIES 12 IMPOSED BY THIS SUBSECTION SHALL BE IN ADDITION TO ANY OTHER ____________________ 13 PENALTIES IMPOSED BY THIS ARTICLE. FOR PURPOSES OF THIS ____________________________________________________________ 14 SUBSECTION, THE OFFERING FOR SALE OR LEASE OF ANY SERVICE OR _______________________________________________________________ 15 TANGIBLE PERSONAL PROPERTY, THE SALE OR USE OF WHICH IS SUBJECT ____________________________________________________________ 16 TO TAX, DURING ANY CALENDAR DAY, SHALL CONSTITUTE A SEPARATE _____________________________________________________________ 17 VIOLATION. THE SECRETARY OF REVENUE MAY DESIGNATE EMPLOYES OF ________________________________________________________________ 18 THE DEPARTMENT TO ENFORCE THE PROVISIONS OF THIS SUBSECTION. THE ______________________________________________________________ 19 EMPLOYES SHALL EXHIBIT PROOF OF AND BE WITHIN THE SCOPE OF THE ___________________________________________________________ 20 DESIGNATION WHEN INSTITUTING PROCEEDINGS AS PROVIDED BY THE _________________________________________ 21 PENNSYLVANIA RULES OF CRIMINAL PROCEDURE. 22 (D) FAILURE OF ANY PERSON TO OBTAIN A LICENSE SHALL NOT 23 RELIEVE THAT PERSON OF LIABILITY TO PAY THE TAX IMPOSED BY THIS 24 ARTICLE. 25 SECTION 5. SECTION 281.2 OF THE ACT, AMENDED OR ADDED 26 DECEMBER 13, 1991 (P.L.373, NO.40), AND JUNE 16, 1994 (P.L.279, 27 NO.48), IS AMENDED TO READ: 28 SECTION 281.2. TRANSFERS TO PUBLIC TRANSPORTATION ASSISTANCE 29 FUND.--(A) ALL REVENUES RECEIVED ON OR AFTER JULY 1, 1992, FROM 30 THE IMPOSITION OF THE TAX ON PERIODICALS SHALL BE TRANSFERRED TO 20030H0200B3160 - 47 -

1 THE PUBLIC TRANSPORTATION ASSISTANCE FUND ACCORDING TO THE 2 FORMULA SET FORTH IN SUBSECTION (B). 3 (B) WITHIN 30 DAYS OF THE CLOSE OF ANY CALENDAR MONTH, .44 4 PER CENT (.0044) OF THE TAXES RECEIVED IN THE PREVIOUS MONTH 5 UNDER THIS ARTICLE, LESS ANY AMOUNTS COLLECTED IN THAT PREVIOUS 6 CALENDAR MONTH UNDER FORMER 74 PA.C.S. § 1314(D) (RELATING TO 7 PUBLIC ASSISTANCE TRANSPORTATION FUND), SHALL BE TRANSFERRED TO 8 THE PUBLIC TRANSPORTATION ASSISTANCE FUND ESTABLISHED UNDER 9 ARTICLE XXIII. 10 (C) IN FISCAL YEAR 1991-1992, THE SECRETARY OF REVENUE WILL 11 ENSURE THAT TEN MILLION DOLLARS ($10,000,000) IS DEPOSITED IN 12 THE PUBLIC ASSISTANCE TRANSPORTATION FUND FROM THE COMBINATION 13 OF REVENUES RECEIVED UNDER FORMER 74 PA.C.S. § 1314(D) AND 14 TRANSFERS OF PERIODICAL TAXES RECEIVED UNDER THIS ARTICLE. 15 (D) WITHIN 30 DAYS OF THE CLOSE OF ANY CALENDAR MONTH, .09 16 PER CENT (.0009) OF THE TAXES RECEIVED IN THE PREVIOUS MONTH 17 UNDER THIS ARTICLE SHALL BE TRANSFERRED TO THE PUBLIC 18 TRANSPORTATION ASSISTANCE FUND ESTABLISHED UNDER ARTICLE XXIII. __________________________________________________________ 19 (E) WITHIN 30 DAYS OF THE CLOSE OF A CALENDAR MONTH, .417 _____________________________________________________________ 20 PER CENT (.00417) OF THE TAXES RECEIVED IN THE PREVIOUS MONTH _____________________________________________________ 21 UNDER THIS ARTICLE SHALL BE TRANSFERRED TO THE PUBLIC _______________________________________________________________ 22 TRANSPORTATION ASSISTANCE FUND ESTABLISHED UNDER ARTICLE XXIII. 23 SECTION 6. SECTION 301(K) OF THE ACT, AMENDED DECEMBER 23, 24 1983 (P.L.370, NO.90), IS AMENDED TO READ: 25 SECTION 301. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND 26 PHRASES WHEN USED IN THIS ARTICLE SHALL HAVE THE MEANING 27 ASCRIBED TO THEM IN THIS SECTION EXCEPT WHERE THE CONTEXT 28 CLEARLY INDICATES A DIFFERENT MEANING, AND, UNLESS SPECIFICALLY 29 PROVIDED OTHERWISE, ANY REFERENCE IN THIS ARTICLE TO THE 30 INTERNAL REVENUE CODE OF 1986 SHALL MEAN THE INTERNAL REVENUE 20030H0200B3160 - 48 -

1 CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.), AS 2 AMENDED TO JANUARY 1, 1997: 3 * * * 4 (K) "INCOME FROM SOURCES WITHIN THIS COMMONWEALTH" FOR A 5 NONRESIDENT INDIVIDUAL, ESTATE OR TRUST MEANS THE SAME AS 6 COMPENSATION, NET PROFITS, GAINS, DIVIDENDS, INTEREST OR INCOME 7 ENUMERATED AND CLASSIFIED UNDER SECTION 303 OF THIS ARTICLE TO 8 THE EXTENT THAT IT IS EARNED, RECEIVED OR ACQUIRED FROM SOURCES 9 WITHIN THIS COMMONWEALTH: __ 10 (1) BY REASON [OR] OF OWNERSHIP OR DISPOSITION OF ANY 11 INTEREST IN REAL OR TANGIBLE PERSONAL PROPERTY IN THIS 12 COMMONWEALTH; OR 13 (2) IN CONNECTION WITH A TRADE, PROFESSION, OCCUPATION 14 CARRIED ON IN THIS COMMONWEALTH OR FOR THE RENDITION OF PERSONAL 15 SERVICES PERFORMED IN THIS COMMONWEALTH; OR 16 (3) AS A DISTRIBUTIVE SHARE OF THE INCOME OF AN 17 UNINCORPORATED BUSINESS, PENNSYLVANIA S CORPORATION, PROFESSION, 18 ENTERPRISE, UNDERTAKING OR OTHER ACTIVITY AS THE RESULT OF WORK 19 DONE, SERVICES RENDERED OR OTHER BUSINESS ACTIVITIES CONDUCTED 20 IN THIS COMMONWEALTH, EXCEPT AS ALLOCATED TO ANOTHER STATE 21 PURSUANT TO REGULATIONS PROMULGATED BY THE DEPARTMENT UNDER THIS 22 ARTICLE; OR 23 (4) FROM INTANGIBLE PERSONAL PROPERTY EMPLOYED IN A TRADE, 24 PROFESSION, OCCUPATION OR BUSINESS CARRIED ON IN THIS ____ 25 COMMONWEALTH[.]; OR __________________________________________________________ 26 (5) AS GAMBLING AND LOTTERY WINNINGS BY REASON OF A WAGER _______________________________________________________________ 27 PLACED IN THIS COMMONWEALTH, THE CONDUCT OF A GAME OF CHANCE OR ___________________________________________________________ 28 OTHER GAMBLING ACTIVITY LOCATED IN THIS COMMONWEALTH OR THE ______________________________________________________________ 29 REDEMPTION OF A LOTTERY PRIZE FROM A LOTTERY CONDUCTED IN THIS _________________________________________________________ 30 COMMONWEALTH, OTHER THAN PRIZES OF THE PENNSYLVANIA STATE 20030H0200B3160 - 49 -

________ 1 LOTTERY. 2 PROVIDED, HOWEVER, THAT "INCOME FROM SOURCES WITHIN THIS 3 COMMONWEALTH" FOR A NONRESIDENT INDIVIDUAL, ESTATE OR TRUST 4 SHALL NOT INCLUDE ANY ITEMS OF INCOME ENUMERATED ABOVE RECEIVED 5 OR ACQUIRED FROM AN INVESTMENT COMPANY REGISTERED WITH THE 6 FEDERAL SECURITIES AND EXCHANGE COMMISSION UNDER THE INVESTMENT 7 COMPANY ACT OF 1940. 8 * * * 9 SECTION 7. SECTION 302 OF THE ACT, ADDED AUGUST 4, 1991 10 (P.L.97, NO.22), IS AMENDED TO READ: 11 SECTION 302. IMPOSITION OF TAX.--(A) EVERY RESIDENT 12 INDIVIDUAL, ESTATE OR TRUST SHALL BE SUBJECT TO, AND SHALL PAY 13 FOR THE PRIVILEGE OF RECEIVING EACH OF THE CLASSES OF INCOME 14 HEREINAFTER ENUMERATED IN SECTION 303, A TAX UPON EACH DOLLAR OF 15 INCOME RECEIVED BY THAT RESIDENT DURING THAT RESIDENT'S TAXABLE 16 YEAR AT THE [FOLLOWING RATES: 17 (1) TWO AND ONE-TENTH PER CENT FOR TAXABLE YEARS COMMENCING 18 WITH OR WITHIN CALENDAR YEAR 1987 THROUGH THE FIRST HALF OF THE 19 TAXABLE YEAR COMMENCING WITH OR WITHIN CALENDAR YEAR 1991. 20 (2) TWO AND EIGHT-TENTHS PER CENT FOR THE SECOND HALF OF THE 21 TAXABLE YEAR COMMENCING WITH OR WITHIN CALENDAR YEAR 1991 AND 22 EACH TAXABLE YEAR THEREAFTER. 23 (3) A TEMPORARY ASSESSMENT EQUAL TO AN ADDITIONAL THREE- 24 TENTHS PER CENT FOR THE SECOND HALF OF THE TAXABLE YEAR 25 COMMENCING WITH OR WITHIN CALENDAR YEAR 1991 THROUGH THE FIRST 26 HALF OF THE TAXABLE YEAR COMMENCING WITH OR WITHIN CALENDAR YEAR ___________________________________________ 27 1992] RATE OF THREE AND SEVEN HUNDREDTHS PER CENT. 28 (B) EVERY NONRESIDENT INDIVIDUAL, ESTATE OR TRUST SHALL BE 29 SUBJECT TO, AND SHALL PAY FOR THE PRIVILEGE OF RECEIVING EACH OF 30 THE CLASSES OF INCOME HEREINAFTER ENUMERATED IN SECTION 303 FROM 20030H0200B3160 - 50 -

1 SOURCES WITHIN THIS COMMONWEALTH, A TAX UPON EACH DOLLAR OF 2 INCOME RECEIVED BY THAT NONRESIDENT DURING THAT NONRESIDENT'S 3 TAXABLE YEAR AT THE [FOLLOWING RATES: 4 (1) TWO AND ONE-TENTH PER CENT FOR TAXABLE YEARS COMMENCING 5 WITH OR WITHIN CALENDAR YEAR 1987 THROUGH THE FIRST HALF OF THE 6 TAXABLE YEAR COMMENCING WITH OR WITHIN CALENDAR YEAR 1991. 7 (2) TWO AND EIGHT-TENTHS PER CENT FOR THE SECOND HALF OF THE 8 TAXABLE YEAR COMMENCING WITH OR WITHIN CALENDAR YEAR 1991 AND 9 EACH TAXABLE YEAR THEREAFTER. 10 (3) A TEMPORARY ASSESSMENT EQUAL TO AN ADDITIONAL THREE- 11 TENTHS PER CENT FOR THE SECOND HALF OF THE TAXABLE YEAR 12 COMMENCING WITH OR WITHIN CALENDAR YEAR 1991 THROUGH THE FIRST 13 HALF OF THE TAXABLE YEAR COMMENCING WITH OR WITHIN CALENDAR YEAR ___________________________________________ 14 1992] RATE OF THREE AND SEVEN HUNDREDTHS PER CENT. 15 SECTION 8. SECTION 304(D) OF THE ACT, AMENDED JUNE 29, 2002 16 (P.L.559, NO.89), IS AMENDED TO READ: 17 SECTION 304. SPECIAL TAX PROVISIONS FOR POVERTY.--* * * 18 (D) ANY CLAIM FOR SPECIAL TAX PROVISIONS HEREUNDER SHALL BE 19 DETERMINED IN ACCORDANCE WITH THE FOLLOWING: 20 (1) IF THE POVERTY INCOME OF THE CLAIMANT DURING AN ENTIRE 21 TAXABLE YEAR IS SIX THOUSAND FIVE HUNDRED DOLLARS ($6,500) OR 22 LESS, OR, IN THE CASE OF A MARRIED CLAIMANT, IF THE JOINT 23 POVERTY INCOME OF THE CLAIMANT AND THE CLAIMANT'S SPOUSE DURING 24 AN ENTIRE TAXABLE YEAR IS THIRTEEN THOUSAND DOLLARS ($13,000) OR 25 LESS, THE CLAIMANT SHALL BE ENTITLED TO A REFUND OR FORGIVENESS 26 OF ANY MONEYS WHICH HAVE BEEN PAID OVER TO (OR WOULD EXCEPT FOR 27 THE PROVISIONS OF THIS ACT BE PAYABLE TO) THE COMMONWEALTH UNDER 28 THE PROVISIONS OF THIS ARTICLE, WITH AN ADDITIONAL INCOME __________________ 29 ALLOWANCE OF [NINE THOUSAND DOLLARS ($9,000)] NINE THOUSAND FIVE ________________________ 30 HUNDRED DOLLARS ($9,500) FOR EACH DEPENDENT OF THE CLAIMANT. FOR 20030H0200B3160 - 51 -

1 PURPOSES OF THIS SUBSECTION, A CLAIMANT SHALL NOT BE CONSIDERED 2 TO BE MARRIED IF: 3 (I) THE CLAIMANT AND THE CLAIMANT'S SPOUSE FILE SEPARATE 4 RETURNS; AND 5 (II) THE CLAIMANT AND THE CLAIMANT'S SPOUSE LIVE APART AT 6 ALL TIMES DURING THE LAST SIX MONTHS OF THE TAXABLE YEAR OR ARE 7 SEPARATED PURSUANT TO A WRITTEN SEPARATION AGREEMENT. 8 (2) IF THE POVERTY INCOME OF THE CLAIMANT DURING AN ENTIRE 9 TAXABLE YEAR DOES NOT EXCEED THE POVERTY INCOME LIMITATIONS 10 PRESCRIBED BY CLAUSE (1) BY MORE THAN THE DOLLAR CATEGORY 11 CONTAINED IN SUBCLAUSES (I), (II), (III), (IV), (V), (VI), 12 (VII), (VIII) OR (IX) OF THIS CLAUSE, THE CLAIMANT SHALL BE 13 ENTITLED TO A REFUND OR FORGIVENESS BASED ON THE PER CENTAGE 14 PRESCRIBED IN SUCH SUBCLAUSES OF ANY MONEYS WHICH HAVE BEEN PAID 15 OVER TO (OR WOULD HAVE BEEN EXCEPT FOR THE PROVISIONS HEREIN BE 16 PAYABLE TO) THE COMMONWEALTH UNDER THIS ARTICLE: 17 (I) NINETY PER CENT IF NOT IN EXCESS OF TWO HUNDRED FIFTY 18 DOLLARS ($250). 19 (II) EIGHTY PER CENT IF NOT IN EXCESS OF FIVE HUNDRED 20 DOLLARS ($500). 21 (III) SEVENTY PER CENT IF NOT IN EXCESS OF SEVEN HUNDRED 22 FIFTY DOLLARS ($750). 23 (IV) SIXTY PER CENT IF NOT IN EXCESS OF ONE THOUSAND DOLLARS 24 ($1,000). 25 (V) FIFTY PER CENT IF NOT IN EXCESS OF ONE THOUSAND TWO 26 HUNDRED FIFTY DOLLARS ($1,250). 27 (VI) FORTY PER CENT IF NOT IN EXCESS OF ONE THOUSAND FIVE 28 HUNDRED DOLLARS ($1,500). 29 (VII) THIRTY PER CENT IF NOT IN EXCESS OF ONE THOUSAND SEVEN 30 HUNDRED FIFTY DOLLARS ($1,750). 20030H0200B3160 - 52 -

1 (VIII) TWENTY PER CENT IF NOT IN EXCESS OF TWO THOUSAND 2 DOLLARS ($2,000). 3 (IX) TEN PER CENT IF NOT IN EXCESS OF TWO THOUSAND TWO 4 HUNDRED FIFTY DOLLARS ($2,250). 5 (3) IF AN INDIVIDUAL HAS A TAXABLE YEAR OF LESS THAN TWELVE 6 MONTHS, THE POVERTY INCOME THEREOF SHALL BE ANNUALIZED IN SUCH 7 MANNER AS THE DEPARTMENT MAY PRESCRIBE. 8 SECTION 9. SECTION 330(B)(1) OF THE ACT, AMENDED MARCH 26, 9 1991 (P.L.5, NO.3), IS AMENDED TO READ: 10 SECTION 330. RETURNS AND LIABILITY.--* * * 11 (B) (1) IN THE CASE OF AN INDIVIDUAL SERVING IN THE ARMED 12 FORCES OF THE UNITED STATES IN AN AREA DESIGNATED BY THE 13 PRESIDENT OF THE UNITED STATES BY EXECUTIVE ORDER AS A "COMBAT ___________________________________________________ 14 [ZONE"] ZONE," AS DESCRIBED IN SECTION 7508 OF THE INTERNAL ______________________________________________________________ 15 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 7508), AS ________ 16 AMENDED, AT ANY TIME DURING THE PERIOD DESIGNATED BY THE 17 PRESIDENT BY EXECUTIVE ORDER AS THE PERIOD OF COMBATANT 18 ACTIVITIES IN THE COMBAT ZONE OR HOSPITALIZED AS A RESULT OF 19 INJURY RECEIVED WHILE SERVING IN THE COMBAT ZONE DURING SUCH 20 TIME, OR AN INDIVIDUAL SERVING IN A MILITARY CAPACITY AS A 21 RESULT OF A FEDERAL CALLUP TO ACTIVE DUTY OR CIVILIAN CAPACITY 22 OUTSIDE THE BOUNDARY OF THIS COMMONWEALTH IN SUPPORT OF SUCH 23 ARMED FORCES, THE PERIOD OF SERVICE IN SUCH AREA, PLUS THE 24 PERIOD OF QUALIFIED CONTINUOUS HOSPITALIZATION ATTRIBUTABLE TO 25 SUCH INJURY, AND THE NEXT ONE HUNDRED EIGHTY DAYS THEREAFTER 26 SHALL BE DISREGARDED IN DETERMINING, UNDER THIS ARTICLE, IN 27 RESPECT OF ANY TAX LIABILITY, INCLUDING ANY INTEREST, PENALTY, 28 ADDITIONAL AMOUNT OR ADDITION TO THE TAX OF SUCH INDIVIDUAL: 29 (I) WHETHER ANY OF THE FOLLOWING ACTS WERE PERFORMED WITHIN 30 THE TIME PRESCRIBED THEREFOR: 20030H0200B3160 - 53 -

1 (A) FILING ANY RETURN OF INCOME TAX, EXCEPT INCOME TAX 2 WITHHELD AT SOURCE; 3 (B) PAYMENT OF ANY INCOME TAX, EXCEPT INCOME TAX WITHHELD AT 4 SOURCE OR ANY INSTALLMENT THEREOF OR OF ANY OTHER LIABILITY TO 5 THE COMMONWEALTH IN RESPECT THEREOF; 6 (C) FILING A PETITION FOR REDETERMINATION OF A DEFICIENCY OR 7 FOR REVIEW OF A DECISION RENDERED BY THE DEPARTMENT; 8 (D) ALLOWANCE OF A CREDIT OR REFUND OF ANY TAX; 9 (E) FILING A CLAIM FOR CREDIT OR REFUND OF ANY TAX; 10 (F) BRINGING SUIT UPON ANY SUCH CLAIM FOR CREDIT; 11 (G) ASSESSMENT OF ANY TAX; 12 (H) GIVING OR MAKING ANY NOTICE OR DEMAND FOR THE PAYMENT OF 13 ANY TAX OR WITH RESPECT TO ANY LIABILITY TO THE COMMONWEALTH IN 14 RESPECT OF ANY TAX; 15 (I) COLLECTION BY THE DEPARTMENT, BY LEVY OR OTHERWISE, OF 16 THE AMOUNT OF ANY LIABILITY IN RESPECT OF ANY TAX; 17 (J) BRINGING SUIT BY THE COMMONWEALTH, OR ANY OFFICER ON ITS 18 BEHALF, IN RESPECT OF ANY LIABILITY IN RESPECT OF ANY TAX; AND 19 (K) ANY OTHER ACT REQUIRED OR PERMITTED UNDER THIS ARTICLE 20 SPECIFIED IN REGULATIONS PRESCRIBED BY THE DEPARTMENT; 21 (II) THE AMOUNT OF ANY CREDIT OR REFUND, INCLUDING INTEREST. 22 * * * 23 SECTION 10. SECTION 335 OF THE ACT IS AMENDED BY ADDING A 24 SUBSECTION TO READ: 25 SECTION 335. REQUIREMENTS CONCERNING RETURNS, NOTICES, 26 RECORDS AND STATEMENTS.--* * * _____________________________________________________________ 27 (E) ANY PERSON WHO IS REQUIRED TO MAKE A FORM W-2G RETURN TO _______________________________________________________________ 28 THE SECRETARY OF THE TREASURY OF THE UNITED STATES IN REGARD TO _____________________________________________________________ 29 TAXABLE GAMBLING OR LOTTERY WINNINGS FROM SOURCES WITHIN THIS ______________________________________________________________ 30 COMMONWEALTH SHALL FILE A COPY OF THE FORM WITH THE DEPARTMENT 20030H0200B3160 - 54 -

________________________________________________________________ 1 BY MARCH 1 OF EACH YEAR OR, IF FILED ELECTRONICALLY, BY MARCH 31 _____________ 2 OF EACH YEAR. 3 SECTION 11. SECTION 401(1)1 OF THE ACT, AMENDED JUNE 29, 4 2002 (P.L.559, NO.89), IS AMENDED AND THE SECTION IS AMENDED BY 5 ADDING A CLAUSE TO READ: 6 SECTION 401. DEFINITIONS.--THE FOLLOWING WORDS, TERMS, AND 7 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANING 8 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT 9 CLEARLY INDICATES A DIFFERENT MEANING: 10 (1) "CORPORATION." ANY OF THE FOLLOWING: 11 (I) A CORPORATION. 12 (II) A JOINT-STOCK ASSOCIATION. 13 (III) A BUSINESS TRUST, LIMITED LIABILITY COMPANY OR OTHER 14 ENTITY WHICH FOR FEDERAL INCOME TAX PURPOSES IS CLASSIFIED AS A 15 CORPORATION. 16 THE TERM DOES NOT INCLUDE: 17 1. A BUSINESS TRUST WHICH QUALIFIES AS A REAL ESTATE 18 INVESTMENT TRUST UNDER SECTION 856 OF THE INTERNAL REVENUE CODE 19 OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 856) OR WHICH IS A 20 QUALIFIED REAL ESTATE INVESTMENT TRUST SUBSIDIARY UNDER SECTION 21 856(I) OF THE INTERNAL REVENUE CODE OF 1986 (26 U.S.C. § _ 22 856(I)). [OR A RELATED BUSINESS TRUST WHICH CONFINES ITS 23 ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE, 24 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND 25 ACTIVITIES OF REAL ESTATE INVESTMENT TRUSTS OR QUALIFIED REAL 26 ESTATE INVESTMENT TRUST SUBSIDIARIES. A BUSINESS TRUST WHICH IS 27 A QUALIFIED REAL ESTATE INVESTMENT TRUST SUBSIDIARY UNDER 28 SECTION 856(I) OF THE INTERNAL REVENUE CODE OF 1986 (26 U.S.C. § 29 856(I)) SHALL BE TREATED AS PART OF THE REAL ESTATE INVESTMENT 30 TRUST WHICH OWNS ALL OF THE STOCK OF THE QUALIFIED REAL ESTATE 20030H0200B3160 - 55 -

1 INVESTMENT TRUST SUBSIDIARY.] 2 * * * _____________________________________________________________ 3 (6) "REGULATED FINANCIAL INSTITUTION." AN ENTITY SUBJECT TO ______________________________________________________________ 4 TAX UNDER ARTICLES VII OR XV AND REGULATED BY THE PENNSYLVANIA _______________________________________________________________ 5 DEPARTMENT OF BANKING, THE FEDERAL RESERVE BOARD, THE OFFICE OF _____________________________________________________ 6 THE COMPTROLLER OF THE CURRENCY, THE OFFICE OF THRIFT ____________________________________________________________ 7 SUPERVISION, THE NATIONAL CREDIT UNION ADMINISTRATION OR THE ______________________________________ 8 FEDERAL DEPOSIT INSURANCE CORPORATION. 9 SECTION 12. SECTION 402.2(B) OF THE ACT, AMENDED OR ADDED 10 JUNE 29, 2002 (P.L.559, NO.89), AND DECEMBER 30, 2002 (P.L.2080, 11 NO.232), IS AMENDED TO READ: 12 SECTION 402.2. INTERESTS IN UNINCORPORATED ENTITIES.--* * * 13 (B) SUBSECTION (A) DOES NOT APPLY TO A CORPORATION'S 14 INTEREST IN AN ENTITY DESCRIBED IN SECTION 401(1)1 OR SECTION ___________ 15 401(1)2[.] OTHER THAN: _____________________________________________________________ 16 (1) A BUSINESS TRUST WHICH IS A REAL ESTATE INVESTMENT TRUST ______________________________________________________________ 17 AS DEFINED IN SECTION 856 OF THE INTERNAL REVENUE CODE OF 1986 _______________________________________________________________ 18 (PUBLIC LAW 99-514, 26 U.S.C. § 856) MORE THAN FIFTY PERCENT OF _______________________________________________________________ 19 THE VOTING POWER OR VALUE OF THE BENEFICIAL INTERESTS OR SHARES ______________________________________________________________ 20 OF WHICH ARE OWNED OR CONTROLLED, DIRECTLY OR INDIRECTLY, BY A _______________________________ 21 SINGLE CORPORATION THAT IS NOT: _____________________________________________________________ 22 (I) A REAL ESTATE INVESTMENT TRUST AS DEFINED IN SECTION 856 _____________________________________ 23 OF THE INTERNAL REVENUE CODE OF 1986; _________________________________________________________ 24 (II) A QUALIFIED REAL ESTATE INVESTMENT TRUST SUBSIDIARY __________________________________________________________ 25 UNDER SECTION 856(I) OF THE INTERNAL REVENUE CODE OF 1986; ____________________________________________ 26 (III) A REGULATED FINANCIAL INSTITUTION; OR _____________________________________________________________ 27 (IV) FORMED AS A HOLDING COMPANY, SUBSIDIARY OR AFFILIATE OF ____________________________________________________________ 28 A REGULATED FINANCIAL INSTITUTION PRIOR TO DECEMBER 1, 2003. ____________________________________________________________ 29 (2) A BUSINESS TRUST WHICH IS A QUALIFIED REAL ESTATE TRUST ________________________________________________________________ 30 SUBSIDIARY UNDER SECTION 856(I) OF INTERNAL REVENUE CODE OF 1986 20030H0200B3160 - 56 -

________________________________________________________________ 1 OWNED, DIRECTLY OR INDIRECTLY, BY A REAL ESTATE INVESTMENT TRUST ______________________________________________________________ 2 AS DEFINED IN SECTION 856 OF THE INTERNAL REVENUE CODE OF 1986 ___________________________________________________________ 3 MORE THAN FIFTY PERCENT OF THE VOTING POWER OR VALUE OF THE ________________________________________________________________ 4 BENEFICIAL INTERESTS OR SHARES OF WHICH ARE OWNED OR CONTROLLED, ____________________________________________________________ 5 DIRECTLY OR INDIRECTLY, BY A SINGLE CORPORATION THAT IS NOT: _____________________________________________________________ 6 (I) A REAL ESTATE INVESTMENT TRUST AS DEFINED IN SECTION 856 _____________________________________ 7 OF THE INTERNAL REVENUE CODE OF 1986; _________________________________________________________ 8 (II) A QUALIFIED REAL ESTATE INVESTMENT TRUST SUBSIDIARY __________________________________________________________ 9 UNDER SECTION 856(I) OF THE INTERNAL REVENUE CODE OF 1986; ____________________________________________ 10 (III) A REGULATED FINANCIAL INSTITUTION; OR _____________________________________________________________ 11 (IV) FORMED AS A HOLDING COMPANY, SUBSIDIARY OR AFFILIATE OF ____________________________________________________________ 12 A REGULATED FINANCIAL INSTITUTION PRIOR TO DECEMBER 1, 2003. 13 SECTION 12.1. THE ACT IS AMENDED BY ADDING A SECTION TO 14 READ: _________________________________________________________ 15 SECTION 403.2. ADDITIONAL WITHHOLDING REQUIREMENTS.--(A) ________________________________________________________________ 16 EVERY PARTNERSHIP EXERCISING, WHETHER IN ITS OWN NAME OR THROUGH ___________________________________________________________ 17 ANY PERSON, ASSOCIATION, BUSINESS TRUST, CORPORATION, JOINT ________________________________________________________ 18 VENTURE, LIMITED LIABILITY COMPANY, LIMITED PARTNERSHIP, _______________________________________________________________ 19 PARTNERSHIP OR OTHER ENTITY, ANY OF THE PRIVILEGES SPECIFIED IN _________________________________________________________ 20 SECTION 402(A)(1) THROUGH (4) SHALL MAKE A RETURN FOR THE _______________________________________________________________ 21 TAXABLE YEAR OF ITS NET NONFILING CORPORATE PARTNERS' SHARES OF ______________________ 22 INCOME AND DEDUCTIONS. _____________________________________________________________ 23 (B) A PARTNERSHIP REQUIRED TO FILE A REPORT UNDER SUBSECTION _______________________________________________________________ 24 (A) SHALL WITHHOLD AND PAY TO THE DEPARTMENT A TAX ON BEHALF OF ______________________________________________________________ 25 ITS NONFILING CORPORATE PARTNERS IN AN AMOUNT EQUAL TO ITS NET ________________________________________________________________ 26 NONFILING CORPORATE PARTNERS' SHARES OF INCOME AND DEDUCTIONS AS _____________________________________________________________ 27 REPORTED TO THE FEDERAL GOVERNMENT MULTIPLIED BY THE TAX RATE _________________________________________________________ 28 APPLICABLE TO THE TAXABLE YEAR BEING REPORTED. ANY AMOUNT ____________________________________________________________ 29 WITHHELD AND PAID TO THE DEPARTMENT ON BEHALF OF A NONFILING ___________________________________________________________ 30 CORPORATE PARTNER SHALL BE CONSIDERED A TAX PAYMENT BY THAT 20030H0200B3160 - 57 -

______________________________________________________________ 1 PARTNER AND CREDITED TO ITS ACCOUNT AS IF IT WAS DIRECTLY PAID _______________ 2 BY THE PARTNER. _________________________________________________________ 3 (C) IF AN AMOUNT OF TAX REQUIRED TO BE WITHHELD AND PAID ________________________________________________________________ 4 UNDER THIS SECTION IS NOT PAID ON OR BEFORE THE DATE PRESCRIBED, ________________________________________________________________ 5 A PENALTY OF FIVE PER CENT OF THE UNDERPAYMENT FOR EACH MONTH OR _______________________________________________________________ 6 FRACTION OF A MONTH FROM THE DUE DATE TO THE DATE PAID SHALL BE _____________________________________________________________ 7 ADDED TO THE TAX AND PAID TO THE DEPARTMENT. THE UNDERPAYMENT _______________________________________________________________ 8 SHALL, FOR PURPOSES OF COMPUTING THE ADDITION FOR ANY MONTH, BE _____________________________________________________________ 9 REDUCED BY THE AMOUNT OF THE PART OF THE TAX WHICH IS PAID BY _____________________________________________________________ 10 THE BEGINNING OF THAT MONTH. THE TOTAL OF THE ADDITIONS SHALL ___________________________________________________ 11 NOT EXCEED FIFTY PER CENT OF THE AMOUNT OF THE TAX. _________________________________________________________ 12 (D) THE REPORT REQUIRED BY SUBSECTION (A) SHALL BE FILED ______________________________________________________________ 13 WITH THE DEPARTMENT IN A FORM PRESCRIBED BY THE DEPARTMENT AND ___________________________________________________________ 14 THE PAYMENT REQUIRED BY SUBSECTION (B) SHALL BE PAID TO THE _____________________________________________________________ 15 DEPARTMENT ON OR BEFORE THE FIFTEENTH DAY OF THE FOURTH MONTH ______________________________________ 16 FOLLOWING THE END OF THE TAXABLE YEAR. __________________________________________________________ 17 (E) THE FOLLOWING WORDS, TERMS, AND PHRASES, WHEN USED IN _____________________________________________________________ 18 THIS SECTION, SHALL HAVE THE MEANING ASCRIBED TO THEM IN THIS _______________________________________________________________ 19 SECTION, EXCEPT WHERE THE CONTEXT CLEARLY INDICATES A DIFFERENT ________ 20 MEANING: _______________________________________________________ 21 "NET NONFILING CORPORATE PARTNERS' SHARES OF INCOME AND ________________________________________________________________ 22 DEDUCTIONS AS REPORTED TO THE FEDERAL GOVERNMENT." THAT PORTION ___________________________________ 23 OF THE INCOME, LESS THE DEDUCTIONS: ____________________________________________________________ 24 (1) REPORTED ON SCHEDULE K OF THE FEDERAL FORM 1065, RETURN ________________________________________________________________ 25 OF PARTNERSHIP INCOME, FILED WITH THE FEDERAL GOVERNMENT FOR THE _________________ 26 TAXABLE YEAR; AND _____________________________________________________________ 27 (2) ALLOCATED ON FEDERAL SCHEDULE K-1 TO NONFILING CORPORATE _________ 28 PARTNERS. ______________________________________________________________ 29 IF THE ENTIRE BUSINESS OF THE PARTNERSHIP IS NOT TRANSACTED IN ____________________________________________________________ 30 THIS COMMONWEALTH, THE AMOUNT COMPUTED UNDER THIS DEFINITION 20030H0200B3160 - 58 -

________________________________________________________________ 1 SHALL BE APPORTIONED TO THIS COMMONWEALTH AS PROVIDED IN SECTION _______________________________________________________________ 2 401(3)2 AS IF THE PARTNERSHIP WERE A CORPORATION SUBJECT TO TAX ___________________ 3 UNDER THIS ARTICLE. ________________________________________________ 4 "NONFILING CORPORATE PARTNER." A PARTNER WHICH: ____________________________________________________ 5 (1) IS A CORPORATION AS DEFINED IN SECTION 401; AND ____________________________________________________________ 6 (2) HAS NOT FILED A TAX REPORT AND PAID THE TAX REQUIRED BY ___________________________________________________ 7 SECTIONS 402 AND 403 FOR THE PREVIOUS TAXABLE YEAR. __________________________________________________________ 8 "PARTNER." AN OWNER OF AN INTEREST IN THE PARTNERSHIP, IN _____________________________________________________ 9 WHATEVER MANNER THAT OWNER AND OWNERSHIP INTEREST ARE ___________ 10 DESIGNATED. _________________________________________________________ 11 "PARTNERSHIP." AN ENTITY CLASSIFIED AS A PARTNERSHIP FOR ____________________________ 12 FEDERAL INCOME TAX PURPOSES. _______________________ 13 (1) THE TERM INCLUDES: __________________________________________________________ 14 (I) A PARTNERSHIP, LIMITED PARTNERSHIP, LIMITED LIABILITY _____________________________________________ 15 PARTNERSHIP OR LIMITED LIABILITY COMPANY; AND _________________________________________________________ 16 (II) ANY SYNDICATE, GROUP, POOL, JOINT VENTURE, BUSINESS ________________________________________________________________ 17 TRUST, ASSOCIATION OR OTHER UNINCORPORATED ORGANIZATION, THROUGH _________________________________________________________ 18 OR BY WHICH A BUSINESS, FINANCIAL OPERATION OR VENTURE IS ___________ 19 CARRIED ON. _________________________________________________ 20 (2) THE TERM DOES NOT INCLUDE AN ENTITY THAT IS: __________________________________________________________ 21 (I) LISTED ON A UNITED STATES NATIONAL STOCK EXCHANGE; OR ________________________________________ 22 (II) DESCRIBED IN SECTION 401(1)1 OR 2. 23 SECTION 13. THE DEFINITION OF "CORPORATION" IN SECTION 24 601(A) OF THE ACT, AMENDED JUNE 29, 2002 (P.L.559, NO.89), IS 25 AMENDED TO READ: 26 SECTION 601. DEFINITIONS AND REPORTS.--(A) THE FOLLOWING 27 WORDS, TERMS AND PHRASES WHEN USED IN THIS ARTICLE VI SHALL HAVE 28 THE MEANING ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE 29 CONTEXT CLEARLY INDICATES A DIFFERENT MEANING: 30 * * * 20030H0200B3160 - 59 -

1 "CORPORATION." (A) ANY OF THE FOLLOWING ENTITIES: 2 (1) A CORPORATION. 3 (2) A JOINT-STOCK ASSOCIATION. 4 (3) A BUSINESS TRUST. _____________ 5 (4) A LIMITED LIABILITY COMPANY[, OTHER THAN]. THIS CLAUSE ________ 6 EXCLUDES A RESTRICTED PROFESSIONAL COMPANY WHICH IS SUBJECT TO 7 15 PA.C.S. CH. 89 SUBCH. L (RELATING TO RESTRICTED PROFESSIONAL ___ 8 COMPANIES)[,] AND WHICH IS DEEMED TO BE A LIMITED PARTNERSHIP 9 PURSUANT TO 15 PA.C.S. § 8997 (RELATING TO TAXATION OF 10 RESTRICTED PROFESSIONAL COMPANIES). 11 (5) AN ENTITY WHICH FOR FEDERAL INCOME TAX PURPOSES IS 12 CLASSIFIED AS A CORPORATION. _____________________________________________________________ 13 (6) A BUSINESS TRUST WHICH IS A REAL ESTATE INVESTMENT TRUST ______________________________________________________________ 14 AS DEFINED IN SECTION 856 OF THE INTERNAL REVENUE CODE OF 1986 _______________________________________________________________ 15 (PUBLIC LAW 99-514, 26 U.S.C. § 856) MORE THAN FIFTY PERCENT OF _______________________________________________________________ 16 THE VOTING POWER OR VALUE OF THE BENEFICIAL INTERESTS OR SHARES ______________________________________________________________ 17 OF WHICH ARE OWNED OR CONTROLLED, DIRECTLY OR INDIRECTLY, BY A _______________________________ 18 SINGLE CORPORATION THAT IS NOT: _____________________________________________________________ 19 (I) A REAL ESTATE INVESTMENT TRUST AS DEFINED IN SECTION 856 _____________________________________ 20 OF THE INTERNAL REVENUE CODE OF 1986; _________________________________________________________ 21 (II) A QUALIFIED REAL ESTATE INVESTMENT TRUST SUBSIDIARY __________________________________________________________ 22 UNDER SECTION 856(I) OF THE INTERNAL REVENUE CODE OF 1986; ______________________________________________________ 23 (III) A REGULATED FINANCIAL INSTITUTION AS DEFINED BY ________________________________ 24 SECTION 401(6) OF ARTICLE IV; OR _____________________________________________________________ 25 (IV) FORMED AS A HOLDING COMPANY, SUBSIDIARY OR AFFILIATE OF ____________________________________________________________ 26 A REGULATED FINANCIAL INSTITUTION PRIOR TO DECEMBER 1, 2003. ______________________________________________________ 27 (7) A BUSINESS TRUST WHICH IS A QUALIFIED REAL ESTATE ________________________________________________________________ 28 INVESTMENT TRUST SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL _____________________________________________________________ 29 REVENUE CODE OF 1986 OWNED, DIRECTLY OR INDIRECTLY, BY A REAL ________________________________________________________ 30 ESTATE INVESTMENT TRUST AS DEFINED IN SECTION 856 OF THE 20030H0200B3160 - 60 -

____________________________________________________________ 1 INTERNAL REVENUE CODE OF 1986 MORE THAN FIFTY PERCENT OF THE ______________________________________________________________ 2 VOTING POWER OR VALUE OF THE BENEFICIAL INTERESTS OR SHARES OF ___________________________________________________________ 3 WHICH ARE OWNED OR CONTROLLED, DIRECTLY OR INDIRECTLY, BY A _______________________________ 4 SINGLE CORPORATION THAT IS NOT: __________________________________________________________ 5 (I) A REAL ESTATE INVESTMENT TRUST AS DEFINED IN SECTION _________________________________________ 6 856 OF THE INTERNAL REVENUE CODE OF 1986; _________________________________________________________ 7 (II) A QUALIFIED REAL ESTATE INVESTMENT TRUST SUBSIDIARY __________________________________________________________ 8 UNDER SECTION 856(I) OF THE INTERNAL REVENUE CODE OF 1986; ______________________________________________________ 9 (III) A REGULATED FINANCIAL INSTITUTION AS DEFINED BY ________________________________ 10 SECTION 401(6) OF ARTICLE IV; OR _____________________________________________________________ 11 (IV) FORMED AS A HOLDING COMPANY, SUBSIDIARY OR AFFILIATE OF ____________________________________________________________ 12 A REGULATED FINANCIAL INSTITUTION PRIOR TO DECEMBER 1, 2003. 13 (B) THE TERM DOES NOT INCLUDE ANY OF THE FOLLOWING: 14 (1) A BUSINESS TRUST WHICH QUALIFIES AS A REAL ESTATE 15 INVESTMENT TRUST UNDER SECTION 856 OF THE INTERNAL REVENUE CODE 16 OF 1986 (26 U.S.C. § 856) OR WHICH IS A QUALIFIED REAL ESTATE 17 INVESTMENT TRUST SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL _ 18 REVENUE CODE OF 1986 (26 U.S.C. § 856(I)). [OR A RELATED 19 BUSINESS TRUST WHICH CONFINES ITS ACTIVITIES IN THIS 20 COMMONWEALTH TO THE MAINTENANCE, ADMINISTRATION AND MANAGEMENT 21 OF INTANGIBLE INVESTMENTS AND ACTIVITIES OF REAL ESTATE 22 INVESTMENT TRUSTS OR QUALIFIED REAL ESTATE INVESTMENT TRUST 23 SUBSIDIARIES. A BUSINESS TRUST WHICH IS A QUALIFIED REAL ESTATE 24 INVESTMENT TRUST SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL 25 REVENUE CODE OF 1986 (26 U.S.C. § 856(I)) SHALL BE TREATED AS 26 PART OF THE REAL ESTATE INVESTMENT TRUST WHICH OWNS ALL OF THE 27 STOCK OF THE QUALIFIED REAL ESTATE INVESTMENT TRUST SUBSIDIARY.] 28 (2) A BUSINESS TRUST WHICH QUALIFIES AS A REGULATED 29 INVESTMENT COMPANY UNDER SECTION 851 OF THE INTERNAL REVENUE 30 CODE OF 1986 (26 U.S.C. § 851) AND WHICH IS REGISTERED WITH THE 20030H0200B3160 - 61 -

1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE 2 INVESTMENT COMPANY ACT OF 1940 (54 STAT. 789, 15 U.S.C. § 80A-1 3 ET SEQ.) OR A RELATED BUSINESS TRUST WHICH CONFINES ITS 4 ACTIVITIES IN THIS COMMONWEALTH TO THE MAINTENANCE, 5 ADMINISTRATION AND MANAGEMENT OF INTANGIBLE INVESTMENTS AND 6 ACTIVITIES OF REGULATED INVESTMENT COMPANIES. 7 (3) A CORPORATION, TRUST OR OTHER ENTITY WHICH IS AN EXEMPT 8 ORGANIZATION AS DEFINED BY SECTION 501 OF THE INTERNAL REVENUE 9 CODE OF 1986 (26 U.S.C. § 501). 10 (4) A CORPORATION, TRUST OR OTHER ENTITY ORGANIZED AS A NOT- 11 FOR-PROFIT ORGANIZATION UNDER THE LAWS OF THIS COMMONWEALTH OR 12 THE LAWS OF ANY OTHER STATE WHICH: 13 (I) WOULD QUALIFY AS AN EXEMPT ORGANIZATION AS DEFINED BY 14 SECTION 501 OF THE INTERNAL REVENUE CODE OF 1986 (26 U.S.C. § 15 501); 16 (II) WOULD QUALIFY AS A HOMEOWNERS ASSOCIATION AS DEFINED BY 17 SECTION 528(C) OF THE INTERNAL REVENUE CODE OF 1986 (26 U.S.C. § 18 528(C)); OR 19 (III) IS A MEMBERSHIP ORGANIZATION SUBJECT TO THE FEDERAL 20 LIMITATIONS ON DEDUCTIONS FROM TAXABLE INCOME UNDER SECTION 277 21 OF THE INTERNAL REVENUE CODE OF 1986 (26 U.S.C. § 277) BUT ONLY 22 IF NO PECUNIARY GAIN OR PROFIT INURES TO ANY MEMBER OR RELATED 23 ENTITY FROM THE MEMBERSHIP ORGANIZATION. 24 (5) A COOPERATIVE AGRICULTURAL ASSOCIATION SUBJECT TO 15 25 PA.C.S. CH. 75 (RELATING TO COOPERATIVE AGRICULTURAL 26 ASSOCIATIONS). 27 (6) A BUSINESS TRUST IF THE TRUST IS ALL OF THE FOLLOWING: 28 (I) CREATED OR MANAGED BY AN ENTITY WHICH IS SUBJECT TO THE 29 TAX IMPOSED BY ARTICLE VII OR XV OR WHICH IS AN AFFILIATE OF THE 30 ENTITY WHICH SHARES AT LEAST EIGHTY PER CENT COMMON OWNERSHIP. 20030H0200B3160 - 62 -

1 (II) CREATED AND MANAGED FOR THE PURPOSE OF FACILITATING THE 2 SECURITIZATION OF INTANGIBLE ASSETS. 3 (III) CLASSIFIED AS A PARTNERSHIP OR A DISREGARDED ENTITY 4 FOR FEDERAL INCOME TAX PURPOSES. 5 * * * 6 SECTION 14. SECTIONS 602(H) AND 607 OF THE ACT, AMENDED OR 7 ADDED JUNE 29, 2002 (P.L.559, NO.89), ARE AMENDED TO READ: 8 SECTION 602. IMPOSITION OF TAX.--* * * 9 (H) THE RATE OF TAX FOR PURPOSES OF THE CAPITAL STOCK AND 10 FRANCHISE TAX FOR TAXABLE YEARS BEGINNING WITHIN THE DATES SET 11 FORTH SHALL BE AS FOLLOWS: 12 TAXABLE YEAR REGULAR RATE SURTAX TOTAL RATE 13 JANUARY 1, 1971, TO 14 DECEMBER 31, 1986 10 MILLS 0 10 MILLS 15 JANUARY 1, 1987, TO 16 DECEMBER 31, 1987 9 MILLS 0 9 MILLS 17 JANUARY 1, 1988, TO 18 DECEMBER 31, 1990 9.5 MILLS 0 9.5 MILLS 19 JANUARY 1, 1991, TO 20 DECEMBER 31, 1991 11 MILLS 2 MILLS 13 MILLS 21 JANUARY 1, 1992, TO 22 DECEMBER 31, 1997 11 MILLS 1.75 MILLS 12.75 MILLS 23 JANUARY 1, 1998, TO 24 DECEMBER 31, 1998 11 MILLS .99 MILLS 11.99 MILLS 25 JANUARY 1, 1999, TO 26 DECEMBER 31, 1999 10.99 MILLS 0 10.99 MILLS 27 JANUARY 1, 2000, TO 28 DECEMBER 31, 2000 8.99 MILLS 0 8.99 MILLS 29 JANUARY 1, 2001, TO 30 DECEMBER 31, 2001 7.49 MILLS 0 7.49 MILLS 20030H0200B3160 - 63 -

1 [JANUARY 1, 2002, TO 2 DECEMBER 31, 2002 7.24 MILLS 0 7.24 MILLS 3 JANUARY 1, 2003, TO 4 DECEMBER 31, 2003 6.99 MILLS 0 6.99 MILLS 5 JANUARY 1, 2004, TO 6 DECEMBER 31, 2004 5.99 MILLS 0 5.99 MILLS 7 JANUARY 1, 2005, TO 8 DECEMBER 31, 2005 4.99 MILLS 0 4.99 MILLS 9 JANUARY 1, 2006, TO 10 DECEMBER 31, 2006 3.99 MILLS 0 3.99 MILLS 11 JANUARY 1, 2007, TO 12 DECEMBER 31, 2007 2.99 MILLS 0 2.99 MILLS 13 JANUARY 1, 2008, TO 14 DECEMBER 31, 2008 1.99 MILLS 0 1.99 MILLS 15 JANUARY 1, 2009, TO 16 DECEMBER 31, 2009 .99 MILLS 0 .99 MILLS] ___________________ 17 JANUARY 1, 2002, TO _________________ __________ _ __________ 18 DECEMBER 31, 2003 7.24 MILLS 0 7.24 MILLS ___________________ 19 JANUARY 1, 2004, TO _________________ __________ _ __________ 20 DECEMBER 31, 2004 6.99 MILLS 0 6.99 MILLS ___________________ 21 JANUARY 1, 2005, TO _________________ __________ _ __________ 22 DECEMBER 31, 2005 5.99 MILLS 0 5.99 MILLS ___________________ 23 JANUARY 1, 2006, TO _________________ __________ _ __________ 24 DECEMBER 31, 2006 4.99 MILLS 0 4.99 MILLS ___________________ 25 JANUARY 1, 2007, TO _________________ __________ _ __________ 26 DECEMBER 31, 2007 3.99 MILLS 0 3.99 MILLS ___________________ 27 JANUARY 1, 2008, TO _________________ __________ _ __________ 28 DECEMBER 31, 2008 2.99 MILLS 0 2.99 MILLS ___________________ 29 JANUARY 1, 2009, TO _________________ __________ _ __________ 30 DECEMBER 31, 2009 1.99 MILLS 0 1.99 MILLS 20030H0200B3160 - 64 -

___________________ 1 JANUARY 1, 2010, TO _________________ __________ _ __________ 2 DECEMBER 31, 2010 .99 MILLS 0 .99 MILLS 3 * * * 4 SECTION 607. EXPIRATION.--THIS ARTICLE SHALL EXPIRE FOR ____ 5 TAXABLE YEARS BEGINNING AFTER DECEMBER 31, [2009] 2010. 6 SECTION 15. THE HEADING OF ARTICLE XI IS AMENDED TO READ: 7 ARTICLE XI 8 [UTILITIES] GROSS RECEIPTS TAX 9 SECTION 16. SECTION 1101(A) OF THE ACT, AMENDED MAY 24, 2000 10 (P.L.106, NO.23), IS AMENDED AND THE SECTION IS AMENDED BY 11 ADDING SUBSECTIONS TO READ: 12 SECTION 1101. IMPOSITION OF TAX.--(A) GENERAL RULE.--EVERY 13 PIPELINE COMPANY, CONDUIT COMPANY, STEAMBOAT COMPANY, CANAL 14 COMPANY, SLACK WATER NAVIGATION COMPANY, TRANSPORTATION COMPANY, 15 AND EVERY OTHER COMPANY, ASSOCIATION, JOINT-STOCK ASSOCIATION, 16 OR LIMITED PARTNERSHIP, NOW OR HEREAFTER INCORPORATED OR 17 ORGANIZED BY OR UNDER ANY LAW OF THIS COMMONWEALTH, OR NOW OR 18 HEREAFTER ORGANIZED OR INCORPORATED BY ANY OTHER STATE OR BY THE 19 UNITED STATES OR ANY FOREIGN GOVERNMENT, AND DOING BUSINESS IN 20 THIS COMMONWEALTH, AND EVERY COPARTNERSHIP, PERSON OR PERSONS 21 OWNING, OPERATING OR LEASING TO OR FROM ANOTHER CORPORATION, 22 COMPANY, ASSOCIATION, JOINT-STOCK ASSOCIATION, LIMITED 23 PARTNERSHIP, COPARTNERSHIP, PERSON OR PERSONS, ANY PIPELINE, 24 CONDUIT, STEAMBOAT, CANAL, SLACK WATER NAVIGATION, OR OTHER 25 DEVICE FOR THE TRANSPORTATION OF FREIGHT, PASSENGERS, BAGGAGE, 26 OR OIL, EXCEPT MOTOR VEHICLES AND RAILROADS, AND EVERY LIMITED 27 PARTNERSHIP, ASSOCIATION, JOINT-STOCK ASSOCIATION, CORPORATION 28 OR COMPANY ENGAGED IN, OR HEREAFTER ENGAGED IN, THE 29 TRANSPORTATION OF FREIGHT OR OIL WITHIN THIS STATE, AND EVERY _ _____________________ 30 TELEPHONE COMPANY [AND], TELEGRAPH COMPANY OR PROVIDER OF MOBILE 20030H0200B3160 - 65 -

___________________________ 1 TELECOMMUNICATIONS SERVICES NOW OR HEREAFTER INCORPORATED OR 2 ORGANIZED BY OR UNDER ANY LAW OF THIS COMMONWEALTH, OR NOW OR 3 HEREAFTER ORGANIZED OR INCORPORATED BY ANY OTHER STATE OR BY THE 4 UNITED STATES OR ANY FOREIGN GOVERNMENT AND DOING BUSINESS IN 5 THIS COMMONWEALTH, AND EVERY LIMITED PARTNERSHIP, ASSOCIATION, 6 JOINT-STOCK ASSOCIATION, COPARTNERSHIP, PERSON OR PERSONS, ___________________ 7 ENGAGED IN TELEPHONE OR TELEGRAPH BUSINESS OR PROVIDING MOBILE ___________________________ 8 TELECOMMUNICATIONS SERVICES IN THIS COMMONWEALTH, SHALL PAY TO 9 THE STATE TREASURER, THROUGH THE DEPARTMENT OF REVENUE, A TAX OF 10 FORTY-FIVE MILLS WITH A SURTAX EQUAL TO FIVE MILLS UPON EACH 11 DOLLAR OF THE GROSS RECEIPTS OF THE CORPORATION, COMPANY OR 12 ASSOCIATION, LIMITED PARTNERSHIP, JOINT-STOCK ASSOCIATION, 13 COPARTNERSHIP, PERSON OR PERSONS, RECEIVED FROM: 14 (1) PASSENGERS, BAGGAGE, OIL AND FREIGHT TRANSPORTED WHOLLY 15 WITHIN THIS STATE; [AND] 16 (2) TELEGRAPH OR TELEPHONE MESSAGES TRANSMITTED WHOLLY ___________________________________ 17 WITHIN THIS STATE AND TELEGRAPH OR TELEPHONE MESSAGES ________________________________________________________________ 18 TRANSMITTED IN INTERSTATE COMMERCE WHERE SUCH MESSAGES ORIGINATE ________________________________________________________________ 19 OR TERMINATE IN THIS STATE AND THE CHARGES FOR SUCH MESSAGES ARE _________________________________________ 20 BILLED TO A SERVICE ADDRESS IN THIS STATE, EXCEPT GROSS RECEIPTS 21 DERIVED FROM: 22 (I) THE SALES OF ACCESS TO THE INTERNET, AS SET FORTH IN 23 ARTICLE II, MADE TO THE ULTIMATE CONSUMER; AND 24 (II) THE SALES FOR RESALE TO PERSONS, PARTNERSHIPS, 25 ASSOCIATIONS, CORPORATIONS OR POLITICAL SUBDIVISIONS SUBJECT TO 26 THE TAX IMPOSED BY THIS ARTICLE UPON GROSS RECEIPTS DERIVED FROM 27 SUCH RESALE OF TELECOMMUNICATIONS SERVICES, INCLUDING: 28 (A) TELECOMMUNICATIONS EXCHANGE ACCESS TO INTERCONNECT WITH 29 A LOCAL EXCHANGE CARRIER'S NETWORK; [AND] _____ 30 (B) NETWORK ELEMENTS ON AN UNBUNDLED BASIS[.]; AND 20030H0200B3160 - 66 -

_________________________________________________________ 1 (C) SALES OF TELECOMMUNICATIONS SERVICES TO INTERCONNECT _________________________________________________________ 2 WITH PROVIDERS OF MOBILE TELECOMMUNICATIONS SERVICES; AND ___________________________________________________________ 3 (3) MOBILE TELECOMMUNICATIONS SERVICES MESSAGES SOURCED TO ________________________________________________________________ 4 THIS COMMONWEALTH BASED ON THE PLACE OF PRIMARY USE STANDARD SET _______________________________________________________________ 5 FORTH IN THE MOBILE TELECOMMUNICATIONS SOURCING ACT (4 U.S.C. § _________________________________________ 6 117), EXCEPT GROSS RECEIPTS DERIVED FROM: _________________________________________________________ 7 (I) THE SALES OF ACCESS TO THE INTERNET, AS SET FORTH IN ______________________________________________ 8 ARTICLE II, MADE TO THE ULTIMATE CONSUMER; AND ____________________________________________________ 9 (II) THE SALES FOR RESALE TO PERSONS, PARTNERSHIPS, _______________________________________________________________ 10 ASSOCIATIONS, CORPORATIONS OR POLITICAL SUBDIVISIONS SUBJECT TO ________________________________________________________________ 11 THE TAX IMPOSED BY THIS ARTICLE UPON GROSS RECEIPTS DERIVED FROM ____________________________________________________________ 12 SUCH RESALE OF MOBILE TELECOMMUNICATIONS SERVICES, INCLUDING ________________________________________________________________ 13 SALES OF MOBILE TELECOMMUNICATIONS SERVICES TO INTERCONNECT WITH _________________________________________ 14 PROVIDERS OF TELECOMMUNICATIONS SERVICES. _____________________________________________________________ 15 (A.1) CREDIT.--TELEGRAPH OR TELEPHONE COMPANIES OR PROVIDERS _______________________________________________________________ 16 OF MOBILE TELECOMMUNICATIONS SERVICES THAT PAY A GROSS RECEIPTS ______________________________________________________________ 17 TAX TO ANOTHER STATE ON MESSAGES OR SERVICES WHICH ARE TAXABLE _______________________________________________________________ 18 UNDER THIS ARTICLE ARE ENTITLED TO A CREDIT AGAINST THE TAX DUE __________________________________________________________ 19 UNDER THIS ARTICLE. THE CREDIT ALLOWED WITH RESPECT TO THE ________________________________________________________________ 20 MESSAGES OR SERVICES SHALL NOT EXCEED THE TAX UNDER THIS ARTICLE _________________________________________ 21 WITH RESPECT TO THE MESSAGES OR SERVICES. 22 * * * ____________________________________________________________ 23 (C.1) SAFE HARBOR BASE YEAR.--FOR PURPOSES OF THE ESTIMATED ____________________________________________________________ 24 TAX REQUIREMENTS UNDER SECTIONS 3003.2 AND 3003.3, THE "SAFE ____________________________________________________ 25 HARBOR BASE YEAR" TAX AMOUNT FOR PROVIDERS OF MOBILE _______________________________________________________________ 26 TELECOMMUNICATIONS SERVICES SHALL BE THE AMOUNT THAT WOULD HAVE ____________________________________________________________ 27 BEEN REQUIRED TO BE PAID BY THE TAXPAYER IF THE TAXPAYER HAD _____________________________ 28 BEEN SUBJECT TO THIS ARTICLE. 29 * * * _______________________________________ 30 (J) SCHEDULE FOR ESTIMATED PAYMENTS.-- 20030H0200B3160 - 67 -

___________________________________________________________ 1 (1) FOR CALENDAR YEAR 2004, THE FOLLOWING SCHEDULE APPLIES _________________________________________________ 2 TO THE PAYMENT OF THE TAX UNDER SUBSECTION(A)(3): ________________________________________________________ 3 (I) FORTY PER CENT OF THE ESTIMATED TAX SHALL BE DUE ON _______________ 4 MARCH 15, 2004. _________________________________________________________ 5 (II) FORTY PER CENT OF THE ESTIMATED TAX SHALL BE DUE ON ______________ 6 JUNE 15, 2004. ___________________________________________________________ 7 (III) TWENTY PER CENT OF THE ESTIMATED TAX SHALL BE DUE ON ___________________ 8 SEPTEMBER 15, 2004. ______________________________________________________ 9 (2) FOR CALENDAR YEARS AFTER 2004, THE PAYMENT OF THE ________________________________________________________________ 10 ESTIMATED TAX UNDER SUBSECTION (A)(3) SHALL BE DUE IN ACCORDANCE ___________________ 11 WITH SECTION 3003.2 ____________________________________________________ 12 (K) PENALTY FOR SUBSTANTIAL UNDERPAYMENT OF INITIAL _______________________________ 13 ESTIMATED GROSS RECEIPTS TAX.-- _________________________________________________________ 14 (1) IF THE AMOUNT OF THE ESTIMATED GROSS RECEIPTS TAX ON ___________________________________________________________ 15 ACCOUNT OF A TAXPAYER'S FIRST APPLICABLE TAXABLE YEAR UNDER _________________________________________________________ 16 SUBSECTION (A)(3) PAID BY A DUE DATE IN SUBSECTION (J) IS _______________________________________________________________ 17 UNDERPAID, A PENALTY SHALL BE IMPOSED IN THE AMOUNT OF FIVE PER ________________________________________________________ 18 CENT OF THE UNDERPAYMENT PER MONTH FOR THE PERIOD OF THE ____________________________________________________________ 19 UNDERPAYMENT, UP TO A MAXIMUM OF TWENTY-FIVE PER CENT OF THE _____________ 20 UNDERPAYMENT. _____________________________________________________________ 21 (2) THE PENALTY IMPOSED BY THIS SUBSECTION IS IN ADDITION TO ________________________________________________________ 22 ANY INTEREST IMPOSED ON UNDERPAYMENTS BY SECTION 3003.3. 23 SECTION 17. SECTION 1111-A OF THE ACT, ADDED JUNE 29, 2002 24 (P.L.559, NO.89), IS AMENDED TO READ: 25 SECTION 1111-A. SURCHARGE.--(A) BY AUGUST 1, 2003, AND BY 26 EACH AUGUST 1 THEREAFTER, THE ATTORNEY GENERAL SHALL CERTIFY TO 27 THE DEPARTMENT A REPORT CONTAINING THE TOTAL REDUCTION OF 28 LIABILITIES, PAID OR UNPAID, TO THE COMMONWEALTH WHICH ARE THE 29 RESULT OF A FINAL ADJUDICATION OF LITIGATION OR A SETTLEMENT OF 30 LITIGATION ENTERED INTO BY THE OFFICE OF ATTORNEY GENERAL FOR 20030H0200B3160 - 68 -

1 CLAIMS MADE UNDER THIS ARTICLE DURING THE PRIOR FISCAL YEAR. 2 (B) BY AUGUST 1, 2003, AND BY EACH AUGUST 1 THEREAFTER, THE 3 STATE TREASURER SHALL CERTIFY TO THE DEPARTMENT A REPORT 4 CONTAINING THE TOTAL REDUCTION OF LIABILITIES, PAID OR UNPAID, 5 TO THE COMMONWEALTH GRANTED BY THE BOARD OF FINANCE AND REVENUE 6 WHICH ARE THE RESULT OF A FINAL ORDER NOT APPEALED BY THE 7 DEPARTMENT FOR CLAIMS MADE UNDER THIS ARTICLE DURING THE PRIOR 8 FISCAL YEAR. 9 (C) IF THE TOTAL REDUCTION OF LIABILITIES REPORTED TO THE 10 DEPARTMENT UNDER SUBSECTIONS (A) AND (B) EXCEED FIVE MILLION 11 DOLLARS ($5,000,000) FOR THE FISCAL YEAR, EACH ENTITY SUBJECT TO 12 THE TAX IMPOSED BY SECTION 1101 SHALL PAY TO THE COMMONWEALTH A 13 SURCHARGE UPON EACH DOLLAR OF THE GROSS RECEIPTS REQUIRED TO BE ____________________________ 14 REPORTED UNDER SECTION 1101, EXCEPT GROSS RECEIPTS FROM _____________________________________________________________ 15 PROVIDING MOBILE TELECOMMUNICATIONS SERVICES AND TELEGRAPH OR ______________________________________________________ 16 TELEPHONE MESSAGES TRANSMITTED IN INTERSTATE COMMERCE, AT THE 17 RATE DETERMINED IN ACCORDANCE WITH SUBSECTION (D) FOR THE 18 FOLLOWING CALENDAR YEAR. 19 (D) THE SECRETARY OF REVENUE SHALL ESTABLISH A SURCHARGE 20 RATE BY ADDING THE TOTAL REDUCTION IN LIABILITIES REPORTED TO 21 THE DEPARTMENT UNDER SUBSECTIONS (A) AND (B) AND DIVIDING THE 22 SUM BY THE TOTAL AMOUNT OF TAXABLE GROSS RECEIPTS REPORTED TO ____________________________ 23 THE DEPARTMENT UNDER SECTION 1101, EXCEPT GROSS RECEIPTS FROM _____________________________________________________________ 24 PROVIDING MOBILE TELECOMMUNICATIONS SERVICES AND TELEGRAPH OR ______________________________________________________ 25 TELEPHONE MESSAGES TRANSMITTED IN INTERSTATE COMMERCE, FOR THE 26 PRIOR CALENDAR YEAR OR SETTLED BY THE DEPARTMENT AS OF AUGUST 1 27 IN THE YEAR THE RETURN IS DUE. THE SURCHARGE RATE SHALL BE 28 ROUNDED TO FOUR DECIMAL PLACES, CERTIFIED BY THE SECRETARY OF 29 REVENUE TO THE APPROPRIATIONS COMMITTEE OF THE SENATE AND THE 30 APPROPRIATIONS COMMITTEE OF THE HOUSE OF REPRESENTATIVES AND 20030H0200B3160 - 69 -

1 PUBLISHED BY THE DEPARTMENT BY OCTOBER 1, 2003, AND BY EACH 2 OCTOBER 1 THEREAFTER IN THE PENNSYLVANIA BULLETIN. 3 (E) IF A SURCHARGE IS IMPOSED FOR A CALENDAR YEAR, THE 4 SECRETARY SHALL REQUIRE ENTITIES SUBJECT TO THE SURCHARGE TO 5 FILE A REPORT CONSISTENT WITH THE REQUIREMENTS OF SECTION 1101 6 BY MARCH 15 OF THAT CALENDAR YEAR. 7 (F) THE SURCHARGE IMPOSED BY SUBSECTION (C) SHALL BE PAID 8 WITHIN THE TIME PRESCRIBED BY LAW. PARTS III, IV, V, VI AND VII 9 OF ARTICLE IV ARE INCORPORATED BY REFERENCE INTO THIS SECTION 10 INSOFAR AS THEY ARE CONSISTENT WITH THIS SECTION AND APPLICABLE 11 TO THE SURCHARGE IMPOSED HEREUNDER. 12 SECTION 18. THE ACT IS AMENDED BY ADDING A SECTION TO READ: __________________________________________________________ 13 SECTION 1112-A. ADDITIONAL TAX.--EVERY ENTITY REQUIRED TO ____________________________________________________________ 14 PAY THE TAX IMPOSED UNDER THIS ARTICLE SHALL, IN ADDITION TO _____________________________________________________________ 15 THAT TAX, PAY AN ADDITIONAL TAX OF SEVEN AND SIX-TENTHS (7.6) ________________________________________________________________ 16 MILLS UPON EACH DOLLAR OF THE STATE TAXABLE VALUE OF ITS UTILITY _______ 17 REALTY. 18 SECTION 19. SECTIONS 1206 AND 1206.1 OF THE ACT, AMENDED 19 JUNE 29, 2002 (P.L.559, NO.89), ARE AMENDED TO READ: 20 SECTION 1206. INCIDENCE AND RATE OF TAX.--AN EXCISE TAX IS 21 HEREBY IMPOSED AND ASSESSED UPON THE SALE OR POSSESSION OF ___ 22 CIGARETTES WITHIN THIS COMMONWEALTH AT THE RATE OF [FIVE] SIX ___________________________ 23 AND SEVENTY-FIVE HUNDREDTHS CENTS PER CIGARETTE. 24 SECTION 1206.1. FLOOR TAX.--(A) A PERSON WHO POSSESSES 25 CIGARETTES ON WHICH THE TAX IMPOSED BY SECTION 1206 HAS BEEN 26 PAID AS OF THE EFFECTIVE DATE OF THIS SECTION SHALL PAY AN 27 ADDITIONAL TAX AT A RATE OF [THREE AND FORTY-FIVE HUNDREDTHS] _______________________________ 28 ONE AND SEVENTY-FIVE HUNDREDTHS CENTS PER CIGARETTE. THE TAX 29 SHALL BE PAID AND REPORTED ON A FORM PRESCRIBED BY THE 30 DEPARTMENT WITHIN NINETY DAYS OF THE EFFECTIVE DATE OF THIS 20030H0200B3160 - 70 -

1 SECTION. 2 (B) IF A CIGARETTE DEALER FAILS TO FILE THE REPORT REQUIRED 3 BY SUBSECTION (A) OR FAILS TO PAY THE TAX IMPOSED BY SUBSECTION 4 (A), THE DEPARTMENT MAY, IN ADDITION TO THE INTEREST AND 5 PENALTIES PROVIDED IN SECTION 1278, DO ANY OF THE FOLLOWING: 6 (1) IMPOSE AN ADMINISTRATIVE PENALTY EQUAL TO THE AMOUNT OF 7 TAX EVADED OR NOT PAID. THE PENALTY SHALL BE ADDED TO THE TAX 8 EVADED OR NOT PAID AND ASSESSED AND COLLECTED AT THE SAME TIME 9 AND IN THE SAME MANNER AS THE TAX. 10 (2) SUSPEND OR REVOKE A CIGARETTE DEALER'S LICENSE. 11 (C) IN ADDITION TO ANY PENALTY IMPOSED UNDER SUBSECTION (B), 12 A PERSON WHO WILFULLY OMITS, NEGLECTS OR REFUSES TO COMPLY WITH 13 A DUTY IMPOSED UNDER SUBSECTION (A) COMMITS A MISDEMEANOR AND 14 SHALL, UPON CONVICTION, BE SENTENCED TO PAY A FINE OF NOT LESS 15 THAN TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500) NOR MORE THAN 16 FIVE THOUSAND DOLLARS ($5,000), TO SERVE A TERM OF IMPRISONMENT 17 NOT TO EXCEED THIRTY DAYS OR BOTH. 18 SECTION 19.1. THE ACT IS AMENDED BY ADDING A SECTION TO 19 READ: _____________________________________________________________ 20 SECTION 1211. HEALTH CARE PROVIDER RETENTION ACCOUNT.--THERE ________________________________________________________________ 21 IS ESTABLISHED IN THE GENERAL FUND A SPECIAL ACCOUNT TO BE KNOWN ___________________________________________________________ 22 AS THE HEALTH CARE PROVIDER RETENTION ACCOUNT. EIGHTEEN AND ________________________________________________________________ 23 FIFTY-TWO HUNDREDTHS PER CENT OF THE PROCEEDS OF THE TAX IMPOSED _______________________________________________________________ 24 BY SECTION 1206 SHALL BE DEPOSITED IN THE ACCOUNT. FUNDS IN THE ________________________________________________________________ 25 ACCOUNT SHALL BE SUBJECT TO AN ANNUAL APPROPRIATION AND SHALL BE ________________________________ 26 ADMINISTERED AS PROVIDED BY LAW. 27 SECTION 20. SECTION 1215 OF THE ACT, AMENDED JUNE 22, 2001 28 (P.L.353, NO.23), IS AMENDED TO READ: 29 SECTION 1215. STAMP TO EVIDENCE THE TAX.--(A) THE 30 DEPARTMENT SHALL BY REGULATION REQUIRE EVERY CIGARETTE STAMPING 20030H0200B3160 - 71 -

1 AGENCY OR ULTIMATE CONSUMER, TO USE CIGARETTE TAX STAMPS TO 2 EVIDENCE THE PAYMENT OF THE TAX IMPOSED BY THIS ARTICLE UNLESS 3 SUCH STAMPS HAVE BEEN AFFIXED TO THE PACKS OF CIGARETTES AND 4 PROPERLY CANCELLED BEFORE SUCH CIGARETTE STAMPING AGENCY OR 5 ULTIMATE CONSUMER RECEIVED THEM. 6 (B) THE DEPARTMENT SHALL BY REGULATION AUTHORIZE THE SALE OF 7 CIGARETTE TAX STAMPS AT SUCH PLACES AND AT SUCH TIMES AS IT 8 DEEMS NECESSARY AND THE DEPARTMENT SHALL PRESCRIBE THE MANNER, 9 TIME AND CONDITIONS UNDER WHICH THE PAYMENT OF TAX SHALL BE 10 MADE. 11 (C) THE DEPARTMENT SHALL ALSO PRESCRIBE THE TYPE OF 12 CIGARETTE TAX STAMPS WHICH SHALL BE USED, TO EVIDENCE PAYMENT OF 13 THE TAX. NOTHING IN THIS PROVISION SHALL BE CONSTRUED AS A 14 LIMITATION UPON THE DEPARTMENT TO PRESCRIBE VARIOUS METHODS OF 15 AFFIXING CIGARETTE TAX STAMPS AND SAID DEPARTMENT SHALL HAVE THE 16 AUTHORITY TO PRESCRIBE ONE OR MORE OF SEVERAL TYPES OF TAX 17 STAMPS WHICH SHALL BE USED BY A PARTICULAR CIGARETTE STAMPING 18 AGENCY WHENEVER, IN THE REASONABLE EXERCISE OF ITS POWERS, IT 19 SHALL BE DEEMED NECESSARY FOR THE PROTECTION OF THE REVENUE. 20 (D) UNDER NO CIRCUMSTANCES SHALL ANY CIGARETTE STAMPING 21 AGENCY BE PERMITTED TO SELL, TRANSFER OR DELIVER TO ANY PERSON 22 ANY PACKAGES OF UNSTAMPED CIGARETTES, OR ANY UNUSED CIGARETTE 23 TAX STAMPS UNLESS SPECIFICALLY PERMITTED BY THE PROVISIONS OF 24 THIS ARTICLE. 25 (E) THE DEPARTMENT SHALL BY REGULATION PERMIT A CIGARETTE 26 STAMPING AGENCY TO PAY FOR PURCHASES ON A DEFERRED BASIS, UPON 27 THE FILING OF A SURETY BOND, OF THE TYPE APPROVED BY THE 28 DEPARTMENT, WITH THE DEPARTMENT, IN AN AMOUNT DEEMED SUFFICIENT 29 BY THE DEPARTMENT TO PROTECT THE REVENUE, SAID BOND TO BE 30 EXECUTED BY THE CIGARETTE STAMPING AGENCY AS PRINCIPAL AND BY A 20030H0200B3160 - 72 -

1 CORPORATE SURETY COMPANY, DULY AUTHORIZED TO ENGAGE IN SUCH _______ 2 BUSINESS IN THE COMMONWEALTH OF PENNSYLVANIA, AS SURETY. IN LIEU _____________________________________________________________ 3 OF THE BOND REQUIRED BY THIS SUBSECTION, THE DEPARTMENT SHALL ________________________________________________________________ 4 ACCEPT OTHER FORMS OF SECURITY, SUCH AS A LINE OF CREDIT, IF THE ________________________________________________________________ 5 DEPARTMENT DEEMS THE SECURITY SUFFICIENT TO PROTECT THE REVENUE. 6 THE DEPARTMENT SHALL DENY DEFERRED PURCHASE PLANS TO ANY 7 STAMPING AGENCY IN ANY STATE WHERE SUCH STATE DENIES STAMPING 8 AGENCIES IN PENNSYLVANIA THE RIGHT TO USE DEFERRED PURCHASE 9 PLANS. THE DEPARTMENT MAY DENY ANY CIGARETTE STAMPING AGENT THE 10 RIGHT TO PURCHASE CIGARETTE TAX STAMPS IF THE CIGARETTE STAMPING 11 AGENT IS DELINQUENT IN REMITTING CIGARETTE TAXES OR FINES OWED 12 THE COMMONWEALTH. _____________________________________________________ 13 (F) THE DEPARTMENT SHALL, UPON APPLICATION, PERMIT A ________________________________________________________ 14 CIGARETTE STAMPING AGENCY TO POST A SURETY BOND WITH THE ____________________________________________________________ 15 DEPARTMENT FOR FIFTY PER CENT OF THE AMOUNT OF THE TAX STAMP _________________________________________________________ 16 PURCHASE, PROVIDED THAT THE AGENCY HAS A RECORD OF TIMELY ____________________________________________________ 17 PAYMENTS OF THE TAX FOR A THREE-YEAR PERIOD PRIOR TO ________________________________________________________________ 18 APPLICATION; AND FURTHER PROVIDED THAT THE AGENCY FILES WITH THE _________________________________________________________ 19 DEPARTMENT A FINANCIAL STATEMENT THAT DEMONSTRATES ASSETS ______________________________________________________________ 20 SUFFICIENT TO PROTECT THE REVENUES. TO PRESERVE THE DISCOUNTED ________________________________________________________________ 21 BOND ARRANGEMENT AN AGENCY MAY BE REQUIRED TO PROVIDE AN UPDATED ____________________________________________________________ 22 FINANCIAL STATEMENT AT THE REQUEST OF THE DEPARTMENT. IF THE _______________________________________________________________ 23 DEPARTMENT DETERMINES THE CIGARETTE STAMPING AGENCY'S FINANCIAL ___________________________________________________________ 24 CONDITION AND THE TYPE AND AMOUNT OF SECURITY POSTED BY THE ________________________________________________________ 25 CIGARETTE STAMPING AGENCY IS INSUFFICIENT TO PROTECT THE ______________________________________________________________ 26 REVENUE, THE DEPARTMENT MAY REQUIRE ADDITIONAL SECURITY IN THE ________________________________________________________ 27 TYPE AND AMOUNT NECESSARY TO PROTECT THE REVENUE. IF THE ______________________________________________________________ 28 CIGARETTE STAMPING AGENCY FAILS TO POST THE TYPE AND AMOUNT OF _____________________________________________________________ 29 SECURITY REQUESTED WITHIN TEN DAYS OF THE MAILING DATE OF THE _________________________________________________________ 30 REQUEST, THE DEPARTMENT MAY REVOKE THE CIGARETTE STAMPING 20030H0200B3160 - 73 -

_________________ 1 AGENCY'S LICENSE. 2 SECTION 21. SECTION 1216 OF THE ACT, AMENDED JUNE 29, 2002 3 (P.L.559, NO.89), IS AMENDED TO READ: 4 SECTION 1216. COMMISSIONS ON SALES.--A CIGARETTE STAMPING 5 AGENT SHALL BE ENTITLED TO A COMMISSION FOR THE AGENT'S SERVICES 6 AND EXPENSES IN AFFIXING CIGARETTE TAX STAMPS. THE COMMISSION ____________ 7 SHALL BE EQUAL TO [ONE AND TWENTY-FIVE HUNDREDTHS] NINETY-EIGHT __________ 8 HUNDREDTHS PER CENT OF THE TOTAL VALUE OF PENNSYLVANIA CIGARETTE 9 TAX STAMPS PURCHASED BY THE AGENT FROM THE DEPARTMENT OR ITS 10 AUTHORIZED AGENTS TO BE USED IN THE STAMPING OF PACKAGES OF 11 CIGARETTES FOR SALE WITHIN THIS COMMONWEALTH. THE CIGARETTE 12 STAMPING AGENT MAY DEDUCT FROM THE MONEYS TO BE PAID TO THE 13 DEPARTMENT OR ITS AUTHORIZED AGENTS FOR THE STAMPS AN AMOUNT ____________ 14 EQUAL TO [ONE AND TWENTY-FIVE HUNDREDTHS] NINETY-EIGHT __________ 15 HUNDREDTHS PER CENT OF THE VALUE OF THE STAMPS PURCHASED. THIS 16 SECTION SHALL NOT APPLY TO PURCHASES OF STAMPS BY A CIGARETTE 17 STAMPING AGENT IN AN AMOUNT LESS THAN ONE HUNDRED DOLLARS 18 ($100). 19 SECTION 22. SECTIONS 1704-B, 1709-B(A) AND 1711-B OF THE 20 ACT, ADDED MAY 7, 1997 (P.L.85, NO.7), ARE AMENDED TO READ: 21 SECTION 1704-B. CARRYOVER, CARRYBACK, REFUND AND ASSIGNMENT 22 OF CREDIT.--(A) [THE AMOUNT OF THE RESEARCH AND DEVELOPMENT TAX 23 CREDIT THAT A TAXPAYER MAY USE AGAINST ANY ONE QUALIFIED TAX 24 LIABILITY DURING ANY YEAR MAY NOT EXCEED FIFTY PER CENT OF SUCH 25 QUALIFIED TAX LIABILITY FOR THAT TAXABLE YEAR.] IF THE TAXPAYER 26 CANNOT USE THE ENTIRE AMOUNT OF THE RESEARCH AND DEVELOPMENT TAX 27 CREDIT FOR THE TAXABLE YEAR IN WHICH THE RESEARCH AND 28 DEVELOPMENT TAX CREDIT IS FIRST APPROVED, THEN THE EXCESS MAY BE 29 CARRIED OVER TO SUCCEEDING TAXABLE YEARS AND USED AS A CREDIT 30 AGAINST THE QUALIFIED TAX LIABILITY OF THE TAXPAYER FOR THOSE 20030H0200B3160 - 74 -

1 TAXABLE YEARS. EACH TIME THAT THE RESEARCH AND DEVELOPMENT TAX 2 CREDIT IS CARRIED OVER TO A SUCCEEDING TAXABLE YEAR, IT IS TO BE 3 REDUCED BY THE AMOUNT THAT WAS USED AS A CREDIT DURING THE 4 IMMEDIATELY PRECEDING TAXABLE YEAR. THE RESEARCH AND DEVELOPMENT 5 TAX CREDIT PROVIDED BY THIS ARTICLE MAY BE CARRIED OVER AND 6 APPLIED TO SUCCEEDING TAXABLE YEARS FOR NO MORE THAN FIFTEEN 7 TAXABLE YEARS FOLLOWING THE FIRST TAXABLE YEAR FOR WHICH THE 8 TAXPAYER WAS ENTITLED TO CLAIM THE CREDIT. 9 (B) A RESEARCH AND DEVELOPMENT TAX CREDIT APPROVED BY THE 10 DEPARTMENT FOR PENNSYLVANIA QUALIFIED RESEARCH AND DEVELOPMENT 11 EXPENSE IN A TAXABLE YEAR FIRST SHALL BE APPLIED AGAINST THE 12 TAXPAYER'S QUALIFIED TAX LIABILITY FOR THE CURRENT TAXABLE YEAR 13 AS OF THE DATE ON WHICH THE CREDIT WAS APPROVED BEFORE THE 14 RESEARCH AND DEVELOPMENT TAX CREDIT IS APPLIED AGAINST ANY TAX 15 LIABILITY UNDER SUBSECTION (A). __ 16 (C) A TAXPAYER IS NOT ENTITLED TO CARRY BACK[,] OR OBTAIN A 17 REFUND OF [OR ASSIGN] AN UNUSED RESEARCH AND DEVELOPMENT TAX 18 CREDIT. ________________________________________________________ 19 (D) A TAXPAYER, UPON APPLICATION TO AND APPROVAL BY THE _____________________________________________________________ 20 DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT, MAY SELL OR ___________________________________________________________ 21 ASSIGN, IN WHOLE OR IN PART, A RESEARCH AND DEVELOPMENT TAX _____________________________________________________________ 22 CREDIT GRANTED TO THE TAXPAYER UNDER THIS ARTICLE IF NO CLAIM _____________________________________________________________ 23 FOR ALLOWANCE OF THE CREDIT IS FILED WITHIN ONE YEAR FROM THE ___________________________________________________________ 24 DATE THE CREDIT IS APPROVED BY THE DEPARTMENT UNDER SECTION ____________________________________________________________ 25 1703-B. THE DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT ___________________________________________________________ 26 SHALL ESTABLISH GUIDELINES FOR THE APPROVAL OF APPLICATIONS ______________________ 27 UNDER THIS SUBSECTION. _____________________________________________________________ 28 (E) THE PURCHASER OR ASSIGNEE OF A PORTION OF A RESEARCH AND _____________________________________________________________ 29 DEVELOPMENT TAX CREDIT UNDER SUBSECTION (D) SHALL IMMEDIATELY _____________________________________________________________ 30 CLAIM THE CREDIT IN THE TAXABLE YEAR IN WHICH THE PURCHASE OR 20030H0200B3160 - 75 -

______________________________________________________________ 1 ASSIGNMENT IS MADE. THE AMOUNT OF THE RESEARCH AND DEVELOPMENT ___________________________________________________________ 2 CREDIT THAT A PURCHASER OR ASSIGNEE MAY USE AGAINST ANY ONE _______________________________________________________________ 3 QUALIFIED TAX LIABILITY MAY NOT EXCEED SEVENTY-FIVE PER CENT OF ________________________________________________________________ 4 SUCH QUALIFIED TAX LIABILITY FOR THE TAXABLE YEAR. THE PURCHASER ______________________________________________________________ 5 OR ASSIGNEE MAY NOT CARRY OVER, CARRY BACK, OBTAIN A REFUND OF ________________________________________________________________ 6 OR ASSIGN THE RESEARCH AND DEVELOPMENT TAX CREDIT. THE PURCHASER ________________________________________________________ 7 OR ASSIGNEE SHALL NOTIFY THE DEPARTMENT OF THE SELLER OR ______________________________________________________ 8 ASSIGNOR OF THE RESEARCH AND DEVELOPMENT TAX CREDIT IN _______________________________________________________ 9 COMPLIANCE WITH PROCEDURES SPECIFIED BY THE DEPARTMENT. 10 SECTION 1709-B. LIMITATION ON CREDITS.--(A) THE TOTAL 11 AMOUNT OF CREDITS APPROVED BY THE DEPARTMENT SHALL NOT EXCEED ______________________ 12 [FIFTEEN MILLION DOLLARS ($15,000,000)] THIRTY MILLION DOLLARS _____________ 13 ($30,000,000) IN ANY FISCAL YEAR. OF THAT AMOUNT, [THREE MILLION ________________________________ 14 DOLLARS ($3,000,000)] SIX MILLION DOLLARS ($6,000,000) SHALL BE 15 ALLOCATED EXCLUSIVELY FOR SMALL BUSINESSES. HOWEVER, IF THE 16 TOTAL AMOUNTS ALLOCATED TO EITHER THE GROUP OF APPLICANTS 17 EXCLUSIVE OF SMALL BUSINESSES OR THE GROUP OF SMALL BUSINESS 18 APPLICANTS IS NOT APPROVED IN ANY FISCAL YEAR, THE UNUSED 19 PORTION WILL BECOME AVAILABLE FOR USE BY THE OTHER GROUP OF 20 QUALIFYING TAXPAYERS. 21 * * * 22 SECTION 1711-B. REPORT TO GENERAL ASSEMBLY.--THE SECRETARY 23 SHALL SUBMIT AN ANNUAL REPORT TO THE GENERAL ASSEMBLY INDICATING 24 THE EFFECTIVENESS OF THE CREDIT PROVIDED BY THIS ARTICLE NO 25 LATER THAN MARCH 15 FOLLOWING THE YEAR IN WHICH THE CREDITS WERE ____________ 26 APPROVED. THE REPORT SHALL INCLUDE THE [NUMBER OF] NAMES OF ALL 27 TAXPAYERS UTILIZING THE CREDIT AS OF THE DATE OF THE REPORT AND ________________ 28 THE AMOUNT OF CREDITS APPROVED AND UTILIZED BY EACH TAXPAYER. ________________________________________________________________ 29 NOTWITHSTANDING ANY LAW PROVIDING FOR THE CONFIDENTIALITY OF TAX ________________________________________________________________ 30 RECORDS, THE INFORMATION CONTAINED IN THE REPORT SHALL BE PUBLIC 20030H0200B3160 - 76 -

____________ 1 INFORMATION. THE REPORT MAY ALSO INCLUDE ANY RECOMMENDATIONS FOR 2 CHANGES IN THE CALCULATION OR ADMINISTRATION OF THE CREDIT. 3 SECTION 23. SECTION 2010 OF THE ACT, AMENDED MAY 12, 1999 4 (P.L.26, NO.4) AND MAY 24, 2000 (P.L.106, NO.23), IS AMENDED TO 5 READ: 6 SECTION 2010. LIMITED TAX CREDITS.--(A) THE GENERAL 7 ASSEMBLY OF THE COMMONWEALTH, CONSCIOUS OF THE FINANCIAL 8 PRESSURES FACING SMALL BREWERS IN PENNSYLVANIA AND THE ATTENDANT 9 RISK OF BUSINESS FAILURE AND LOSS OF EMPLOYMENT OPPORTUNITY, 10 DECLARES IT PUBLIC POLICY THAT RENEWAL AND IMPROVEMENT OF SMALL 11 BREWERS BE ENCOURAGED AND ASSISTED BY A LIMITED TAX SUBSIDY TO 12 BE GRANTED DURING THE PERIOD SET FORTH IN THIS SECTION. 13 (B) AS USED IN THIS SECTION: 14 "AMOUNTS PAID." THE PHRASE MEANS (I) AMOUNTS ACTUALLY PAID, 15 OR (II) AT THE TAXPAYER'S ELECTION, AMOUNTS PROMISED TO BE PAID 16 UNDER FIRM PURCHASE CONTRACTS ACTUALLY EXECUTED DURING ANY 17 CALENDAR YEAR FALLING WITHIN THE EFFECTIVE PERIOD OF THIS 18 SECTION: PROVIDED, HOWEVER, THAT THERE SHALL BE NO DUPLICATION 19 OF "AMOUNTS PAID" UNDER THIS DEFINITION. 20 "EFFECTIVE PERIOD." THE PERIOD FROM JANUARY 1, 1974, TO _________________ 21 [DECEMBER 31, 2003] DECEMBER 31, 2008, INCLUSIVE. 22 "QUALIFYING CAPITAL EXPENDITURES." AMOUNTS PAID BY A 23 TAXPAYER DURING THE EFFECTIVE PERIOD OF THIS SECTION FOR THE 24 PURCHASE OF ITEMS OF PLANT, MACHINERY OR EQUIPMENT FOR USE BY 25 THE TAXPAYER WITHIN THIS COMMONWEALTH IN THE MANUFACTURE AND 26 SALE OF MALT OR BREWED BEVERAGES: PROVIDED, HOWEVER, THAT THE 27 TOTAL AMOUNT OF QUALIFYING CAPITAL EXPENDITURES MADE BY A 28 TAXPAYER WITHIN A SINGLE CALENDAR YEAR SHALL NOT EXCEED TWO 29 HUNDRED THOUSAND DOLLARS ($200,000). 30 "SECRETARY." THE SECRETARY OF REVENUE OF THE COMMONWEALTH OF 20030H0200B3160 - 77 -

1 PENNSYLVANIA WHERE NOT OTHERWISE QUALIFIED. 2 "TAXPAYER." A MANUFACTURER OF MALT OR BREWED BEVERAGES 3 CLAIMING A TAX CREDIT OR CREDITS UNDER THIS SECTION AND HAVING 4 AN ANNUAL PRODUCTION OF MALT OR BREWED BEVERAGES THAT DOES NOT ________________ 5 EXCEED [THREE HUNDRED THOUSAND (300,000)] ONE MILLION FIVE ____________________________ 6 HUNDRED THOUSAND (1,500,000) BARRELS. 7 (C) A TAX CREDIT OR CREDITS SHALL BE ALLOWED FOR EACH 8 CALENDAR YEAR TO A TAXPAYER, AS HEREINAFTER PROVIDED, NOT TO 9 EXCEED IN TOTAL AMOUNT THE AMOUNT OF QUALIFYING CAPITAL 10 EXPENDITURES MADE BY THE TAXPAYER AND CERTIFIED BY THE 11 SECRETARY. 12 (D) A TAXPAYER DESIRING TO CLAIM A TAX CREDIT OR CREDITS __________________________________ 13 UNDER THIS SECTION SHALL WITHIN ONE YEAR OF THE DATE OF THE ________________________________________________________ 14 ORIGINAL PURCHASE OF THE QUALIFYING CAPITAL EXPENDITURES, IN 15 ACCORDANCE WITH REGULATIONS PROMULGATED BY THE SECRETARY, REPORT 16 ANNUALLY TO THE SECRETARY THE NATURE, AMOUNTS AND DATES OF 17 QUALIFYING CAPITAL EXPENDITURES MADE BY HIM AND SUCH OTHER 18 INFORMATION AS THE SECRETARY SHALL REQUIRE. IF SATISFIED AS TO 19 THE CORRECTNESS OF SUCH A REPORT, THE SECRETARY SHALL ISSUE TO 20 THE TAXPAYER A CERTIFICATE ESTABLISHING THE AMOUNT OF QUALIFYING 21 CAPITAL EXPENDITURES MADE BY THE TAXPAYER AND INCLUDED WITHIN 22 SAID REPORT. THE TAXPAYER SHALL ALSO PROVIDE TO THE SECRETARY 23 THE NUMBER OF EMPLOYES, TOTAL PRODUCTION OF MALT OR BREWED 24 BEVERAGES AND THE AMOUNT OF CAPITAL EXPENDITURES MADE BY THE 25 TAXPAYER AT EACH LOCATION OPERATED BY THE TAXPAYER OR A PARENT 26 CORPORATION, SUBSIDIARY, JOINT VENTURE OR AFFILIATE. ALSO, THE 27 TAXPAYER SHALL NOTIFY THE SECRETARY OF ANY CONTRACT FOR 28 PRODUCTION HELD WITH ANOTHER MANUFACTURER. THE SECRETARY SHALL 29 FILE A REPORT ANNUALLY WITH THE CHIEF CLERK OF THE HOUSE OF 30 REPRESENTATIVES AND WITH THE SECRETARY OF THE SENATE OUTLINING 20030H0200B3160 - 78 -

1 THE EMPLOYMENT, PRODUCTION, EXPENDITURES AND TAX CREDITS 2 AUTHORIZED UNDER THIS SECTION. 3 (E) UPON RECEIPT FROM A TAXPAYER OF A CERTIFICATE FROM THE 4 SECRETARY ISSUED UNDER SUBSECTION (C), THE SECRETARY OF REVENUE 5 SHALL GRANT A TAX CREDIT OR CREDITS IN THE AMOUNT CERTIFIED __________________ 6 AGAINST ANY TAX DUE UNDER THIS ARTICLE IN THE CALENDAR YEAR IN 7 WHICH THE EXPENDITURES WERE [FIRST] INCURRED OR [THEREAFTER] _______________ 8 AGAINST ANY TAX BECOMING DUE FROM THE TAXPAYER UNDER THIS _____________________________________ 9 ARTICLE IN THE FOLLOWING THREE CALENDAR YEARS. NO CREDIT SHALL 10 BE ALLOWED AGAINST ANY TAX DUE FOR ANY TAXABLE PERIOD ENDING _________________ 11 AFTER [DECEMBER 31, 2003] DECEMBER 31, 2008. 12 SECTION 24. THE DEFINITIONS OF "FEDERAL ESTATE TAX" AND 13 "TRANSFER OF PROPERTY FOR THE SOLE USE" IN SECTION 2102 OF THE 14 ACT, ADDED JUNE 29, 2002 (P.L.559, NO.89), ARE AMENDED TO READ: 15 SECTION 2102. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND 16 PHRASES, WHEN USED IN THIS ARTICLE, SHALL HAVE THE MEANINGS 17 ASCRIBED TO THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT 18 CLEARLY INDICATES A DIFFERENT MEANING[, AND, UNLESS SPECIFICALLY 19 PROVIDED OTHERWISE, ANY REFERENCE IN THIS ARTICLE TO THE 20 INTERNAL REVENUE CODE OF 1986 SHALL MEAN THE INTERNAL REVENUE 21 CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.) AS 22 AMENDED TO JUNE 1, 2001]: 23 * * * 24 ["FEDERAL ESTATE TAX." THE TAX IMPOSED UNDER CHAPTER 11 OF 25 THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. 26 § 2001 ET SEQ.) AND REGULATIONS PROMULGATED THEREUNDER.] 27 * * * 28 "TRANSFER OF PROPERTY FOR THE SOLE USE." A TRANSFER TO OR 29 FOR THE USE OF A TRANSFEREE IF, DURING THE TRANSFEREE'S 30 LIFETIME, THE TRANSFEREE IS ENTITLED TO ALL INCOME AND PRINCIPAL 20030H0200B3160 - 79 -

1 DISTRIBUTIONS FROM THE PROPERTY AND NO PERSON, INCLUDING THE ______________ 2 TRANSFEREE, POSSESSES [A] AN INTER VIVOS POWER OF APPOINTMENT 3 OVER THE PROPERTY. 4 * * * 5 SECTION 25. SECTION 2111(R) OF THE ACT, AMENDED JUNE 29, 6 2002 (PL.559, NO.89), IS AMENDED TO READ: 7 SECTION 2111. TRANSFERS NOT SUBJECT TO TAX.--* * * 8 (R) PAYMENTS UNDER PENSION, STOCK BONUS, PROFIT-SHARING AND 9 OTHER RETIREMENT PLANS, INCLUDING H.R.10 PLANS, INDIVIDUAL 10 RETIREMENT ACCOUNTS, INDIVIDUAL RETIREMENT ANNUITIES AND 11 INDIVIDUAL RETIREMENT BONDS TO DISTRIBUTEES DESIGNATED BY THE 12 DECEDENT OR DESIGNATED IN ACCORDANCE WITH THE TERMS OF THE PLAN, 13 ARE EXEMPT FROM INHERITANCE TAX TO THE EXTENT THAT THE DECEDENT 14 BEFORE HIS DEATH DID NOT OTHERWISE HAVE THE RIGHT TO POSSESS 15 (INCLUDING PROPRIETARY RIGHTS AT TERMINATION OF EMPLOYMENT), 16 ENJOY, ASSIGN OR ANTICIPATE THE PAYMENT MADE. IN ADDITION TO 17 THIS EXEMPTION, WHETHER OR NOT THE DECEDENT POSSESSED ANY OF 18 THESE RIGHTS, THE PAYMENTS ARE EXEMPT FROM INHERITANCE TAX TO 19 THE SAME EXTENT THAT THEY ARE EXEMPT FROM FEDERAL ESTATE TAX _________________________________________________________ 20 UNDER THE PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986 ___________________________________________________________ 21 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.), AS AMENDED, ANY ______________________________________________________________ 22 SUPPLEMENT TO THE CODE OR ANY SIMILAR PROVISION IN EFFECT FROM ____________________________________________ 23 TIME TO TIME FOR FEDERAL ESTATE TAX PURPOSES, EXCEPT THAT A 24 PAYMENT WHICH WOULD OTHERWISE BE EXEMPT FOR FEDERAL ESTATE TAX 25 PURPOSES IF IT HAD NOT BEEN MADE IN A LUMP-SUM OR OTHER 26 NONEXEMPT FORM OF PAYMENT SHALL BE EXEMPT FROM INHERITANCE TAX 27 EVEN THOUGH PAID IN A LUMP-SUM OR OTHER FORM OF PAYMENT. THE 28 PROCEEDS OF LIFE INSURANCE OTHERWISE EXEMPT UNDER SUBSECTION (D) 29 SHALL NOT BE SUBJECT TO INHERITANCE TAX BECAUSE THEY ARE PAID 30 UNDER A PENSION, STOCK BONUS, PROFIT-SHARING, H.R.10 OR OTHER 20030H0200B3160 - 80 -

1 RETIREMENT PLAN. 2 SECTION 26. SECTIONS 2117 AND 2145 OF THE ACT, AMENDED OR 3 ADDED AUGUST 4, 1991 (P.L.97, NO.22), ARE AMENDED TO READ: 4 SECTION 2117. ESTATE TAX.--(A) IN THE EVENT THAT A FEDERAL __ 5 ESTATE TAX [WOULD BE] IS PAYABLE TO THE FEDERAL GOVERNMENT ON 6 THE TRANSFER OF THE TAXABLE ESTATE OF A DECEDENT WHO WAS A 7 RESIDENT OF THIS COMMONWEALTH AT THE TIME OF HIS DEATH, AND THE 8 INHERITANCE TAX, IF ANY, ACTUALLY PAID TO THE COMMONWEALTH BY 9 REASON OF THE DEATH OF THE DECEDENT (DISREGARDING INTEREST OR 10 THE AMOUNT OF ANY DISCOUNT ALLOWED UNDER SECTION 2142) IS LESS 11 THAN THE MAXIMUM CREDIT FOR STATE DEATH TAXES ALLOWABLE UNDER 12 SECTION 2011 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 13 99-514, 26 U.S.C. § 2011), A TAX EQUAL TO THE DIFFERENCE IS 14 IMPOSED. IF A RESIDENT DECEDENT OWNED OR HAD AN INTEREST IN REAL 15 PROPERTY OR TANGIBLE PERSONAL PROPERTY HAVING A SITUS IN ANOTHER 16 STATE, THE TAX SO IMPOSED SHALL BE REDUCED BY THE GREATER OF: 17 (1) THE AMOUNT OF DEATH TAXES ACTUALLY PAID TO THE OTHER 18 STATE WITH RESPECT TO THE ESTATE OF THE DECEDENT, EXCLUDING ANY 19 DEATH TAX EXPRESSLY IMPOSED TO RECEIVE THE BENEFIT OF THE CREDIT 20 FOR STATE DEATH TAXES ALLOWED UNDER SECTION 2011 OF THE INTERNAL 21 REVENUE CODE OF 1986 (26 U.S.C. § 2011); OR 22 (2) AN AMOUNT COMPUTED BY MULTIPLYING THE MAXIMUM CREDIT FOR 23 STATE DEATH TAXES ALLOWABLE UNDER SECTION 2011 OF THE INTERNAL 24 REVENUE CODE OF 1986 (26 U.S.C. § 2011) BY A FRACTION, THE 25 NUMERATOR OF WHICH IS THE VALUE OF THE REAL PROPERTY AND 26 TANGIBLE PERSONAL PROPERTY TO THE EXTENT INCLUDED IN THE 27 DECEDENT'S GROSS ESTATE FOR FEDERAL ESTATE TAX PURPOSES AND 28 HAVING A SITUS IN THE OTHER STATE AND THE DENOMINATOR OF WHICH 29 IS THE VALUE OF THE DECEDENT'S GROSS ESTATE FOR FEDERAL ESTATE 30 TAX PURPOSES. 20030H0200B3160 - 81 -

__ 1 (B) IN THE EVENT THAT A FEDERAL ESTATE TAX [WOULD BE] IS 2 PAYABLE TO THE FEDERAL GOVERNMENT ON THE TRANSFER OF THE TAXABLE 3 ESTATE OF A DECEDENT WHO WAS NOT A RESIDENT OF THIS COMMONWEALTH 4 AT THE TIME OF HIS DEATH BUT WHO OWNED OR HAD AN INTEREST IN 5 REAL PROPERTY OR TANGIBLE PERSONAL PROPERTY HAVING A SITUS IN 6 THIS COMMONWEALTH, A TAX IS IMPOSED IN AN AMOUNT COMPUTED BY 7 MULTIPLYING THE MAXIMUM CREDIT FOR STATE DEATH TAXES ALLOWABLE 8 UNDER SECTION 2011 OF THE INTERNAL REVENUE CODE OF 1986 (26 9 U.S.C. § 2011) BY A FRACTION, THE NUMERATOR OF WHICH IS THE 10 VALUE OF THE REAL PROPERTY AND TANGIBLE PERSONAL PROPERTY TO THE 11 EXTENT INCLUDED IN THE DECEDENT'S GROSS ESTATE FOR FEDERAL 12 ESTATE TAX PURPOSES HAVING A SITUS IN THIS COMMONWEALTH AND THE 13 DENOMINATOR OF WHICH IS THE VALUE OF THE DECEDENT'S GROSS ESTATE 14 FOR FEDERAL ESTATE TAX PURPOSES, AND DEDUCTING FROM THAT AMOUNT 15 THE INHERITANCE TAX, IF ANY, ACTUALLY PAID TO THE COMMONWEALTH 16 (DISREGARDING INTEREST OR THE AMOUNT OF ANY DISCOUNT ALLOWED 17 UNDER SECTION 2142). 18 (C) WHEN AN INHERITANCE TAX IS IMPOSED AFTER AN ESTATE TAX 19 IMPOSED UNDER SUBSECTION (A) OR (B) HAS BEEN PAID, THE ESTATE 20 TAX PAID SHALL BE CREDITED AGAINST ANY INHERITANCE TAX LATER 21 IMPOSED. 22 SECTION 2145. ESTATE TAX RETURN.--(A) THE PERSON OR PERSONS 23 REQUIRED BY SECTION 2136 TO MAKE THE INHERITANCE TAX RETURN 24 SHALL BE INITIALLY LIABLE FOR PAYMENT OF THE ESTATE TAX. 25 (B) THE PERSONAL REPRESENTATIVE OF EVERY DECEDENT OR, IF 26 THERE IS NO PERSONAL REPRESENTATIVE, ANY OTHER FIDUCIARY [THAT _______ 27 WOULD BE CHARGEABLE] CHARGED BY LAW WITH THE DUTY OF FILING A 28 FEDERAL ESTATE TAX RETURN, WITHIN [TEN MONTHS AFTER THE _________________________________________ 29 DECEDENT'S DEATH] ONE MONTH OF THE FILING OR RECEIPT OF THE ______ 30 RETURN SHALL FILE WITH THE REGISTER OR, IF THE DECEDENT WAS A 20030H0200B3160 - 82 -

1 NONRESIDENT, WITH THE REGISTER WHO ISSUED LETTERS, IF ANY, IN 2 THIS COMMONWEALTH, OR OTHERWISE WITH THE DEPARTMENT, A [TAX 3 RETURN PRESCRIBED BY THE DEPARTMENT, ANY RETURN FILED UNDER 4 SECTION 6018 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW ______________________ 5 99-514, 26 U.S.C. § 6018) AS AMENDED] COPY OF THE DECEDENT'S _________________________ 6 FEDERAL ESTATE TAX RETURN AND OF ANY COMMUNICATION FROM THE 7 FEDERAL GOVERNMENT MAKING ANY FINAL CHANGE IN THE RETURN OR OF 8 THE TAX DUE. THE ASSESSMENT OF ESTATE TAX SHALL BE MADE BY THE 9 REGISTER OR DEPARTMENT WITHIN THREE MONTHS AFTER THE FILING OF 10 THE DOCUMENTS REQUIRED TO BE FILED AND, IF NOT SO MADE, SHALL BE 11 MADE WITHIN AN ADDITIONAL PERIOD AS THE COURT, UPON APPLICATION 12 OF ANY PARTY IN INTEREST, INCLUDING THE PERSONAL REPRESENTATIVE, 13 SHALL FIX. 14 (C) THE ESTATE TAX IS DUE AT THE DATE OF THE DECEDENT'S 15 DEATH BUT SHALL NOT BECOME DELINQUENT UNTIL THE EXPIRATION OF 16 NINE MONTHS AFTER DECEDENT'S DEATH. ANY ESTATE TAX OCCASIONED BY 17 A FINAL CHANGE IN THE FEDERAL RETURN OR OF THE TAX DUE SHALL NOT 18 BECOME DELINQUENT UNTIL THE EXPIRATION OF ONE MONTH AFTER THE 19 PERSON OR PERSONS LIABLE TO PAY THE TAX HAVE RECEIVED FINAL 20 NOTICE OF THE INCREASE IN THE FEDERAL ESTATE TAX. 21 (D) NO DISCOUNT SHALL BE ALLOWED IN PAYING THE ESTATE TAX. 22 (E) IF THE ESTATE TAX IS NOT PAID BEFORE THE DATE IT BECOMES 23 DELINQUENT UNDER SUBSECTION (C), INTEREST ON THE UNPAID TAX 24 SHALL BE CHARGED AFTER THE DATE OF DELINQUENCY AT THE RATE 25 ESTABLISHED IN SECTION 2143. 26 (F) THE ESTATE TAX SHALL BE APPORTIONED AND ULTIMATELY BORNE 27 IN ACCORDANCE WITH THE PROVISIONS OF 20 PA.C.S. CH. 37 (RELATING 28 TO APPORTIONMENT OF DEATH TAXES) UNLESS OTHERWISE PROVIDED BY 29 THIS ARTICLE OR IN THE INSTRUMENT OF TRANSFER. 30 (G) WHEN THE DECEDENT WAS A RESIDENT, THE ESTATE TAX SHALL 20030H0200B3160 - 83 -

1 BE PAID TO THE REGISTER. WHEN THE DECEDENT WAS A NONRESIDENT, 2 THE ESTATE TAX SHALL BE PAID TO THE REGISTER WHO ISSUED LETTERS, 3 IF ANY, IN THIS COMMONWEALTH; OTHERWISE, IT SHALL BE PAID TO THE 4 DEPARTMENT. 5 SECTION 27. SECTION 2301 OF THE ACT, AMENDED OR ADDED JULY 6 1, 1994 (P.L.413, NO.67) AND MAY 12, 1999 (P.L.26, NO.4), IS 7 AMENDED TO READ: 8 SECTION 2301. PUBLIC TRANSPORTATION ASSISTANCE FUND.--(A) 9 THERE IS HEREBY CREATED A SPECIAL FUND IN THE STATE TREASURY TO 10 BE KNOWN AS THE PUBLIC TRANSPORTATION ASSISTANCE FUND. MONEYS 11 DEPOSITED INTO THE FUND AND INTEREST WHICH ACCRUES FROM THOSE 12 FUNDS SHALL BE USED FOR THE PURPOSES DELINEATED IN 74 PA.C.S. § 13 1310 (RELATING TO DISTRIBUTION OF FUNDING). 14 (B) FUNDS RECEIVED UNDER THE PROVISIONS OF THIS SECTION, AS 15 ESTIMATED AND CERTIFIED BY THE SECRETARY OF REVENUE, SHALL BE 16 DEPOSITED WITHIN FIVE DAYS OF THE END OF EACH MONTH INTO THE 17 FUND. UNLESS OTHERWISE SPECIFICALLY NOTED, THE PROVISIONS OF 18 ARTICLE II SHALL APPLY TO THE FEES AND TAXES IMPOSED BY 19 SUBSECTIONS (C), (D) AND (E). [UNLESS OTHERWISE SPECIFICALLY 20 NOTED, THE PROVISIONS OF ARTICLE XI-A SHALL APPLY TO THE TAX 21 IMPOSED UNDER SUBSECTION (F).] 22 (C) THERE IS HEREBY IMPOSED A FEE ON EACH SALE IN THIS 23 COMMONWEALTH OF NEW TIRES FOR HIGHWAY USE AT THE RATE OF ONE 24 DOLLAR ($1) PER TIRE. THE FEE SHALL BE COLLECTED BY THE SELLER 25 FROM THE PURCHASER AND REMITTED TO THE DEPARTMENT OF REVENUE. NO 26 EXCLUSIONS OR EXEMPTIONS, OTHER THAN THOSE FOR GOVERNMENTAL 27 ENTITIES PROVIDED UNDER ARTICLE II, SHALL APPLY TO THE FEES AND 28 TAXES IMPOSED BY THIS SECTION. 29 (D) (1) THERE IS HEREBY IMPOSED ON EACH LEASE OF A MOTOR 30 VEHICLE SUBJECT TO TAX UNDER ARTICLE II AN ADDITIONAL TAX OF 20030H0200B3160 - 84 -

1 THREE PER CENT OF THE TOTAL LEASE PRICE CHARGED. 2 (2) AS USED IN THIS SUBSECTION ON AND AFTER APRIL 1, 1995, 3 THE TERM "MOTOR VEHICLE" DOES NOT INCLUDE TRUCKS IN CLASS 4 OR 4 HIGHER AS DEFINED IN 75 PA.C.S. § 1916(A)(1) (RELATING TO TRUCKS 5 AND TRUCK TRACTORS). 6 (E) THERE IS HEREBY IMPOSED ON EACH RENTAL OF A MOTOR 7 VEHICLE SUBJECT TO TAX UNDER ARTICLE II A FEE OF TWO DOLLARS 8 ($2) FOR EACH DAY OR PART OF A DAY FOR WHICH THE VEHICLE IS 9 RENTED. 10 [(F) EVERY ENTITY REQUIRED TO PAY THE TAX IMPOSED UNDER 11 ARTICLE XI-A SHALL, IN ADDITION TO THAT TAX, PAY AN ADDITIONAL 12 TAX OF SEVEN AND SIX-TENTHS (7.6) MILLS UPON EACH DOLLAR OF THE 13 STATE TAXABLE VALUE OF ITS UTILITY REALTY.] 14 SECTION 28. THE ACT IS AMENDED BY ADDING A SECTION TO READ: __________________________________________________________ 15 SECTION 2302. ADMINISTRATION.--FOR FISCAL YEARS BEGINNING _____________________________________________________________ 16 AFTER JUNE 30, 2003, THE DEPARTMENT OF REVENUE SHALL NOT MAKE ______________________________________________________ 17 ANY TRANSFERS INTO OR OUT OF THE PUBLIC TRANSPORTATION ___________________________________________________________ 18 ASSISTANCE FUND TO ADJUST FOR PRIOR YEAR PAYMENTS, CREDITS, ___________________ 19 REFUNDS OR APPEALS. 20 SECTION 29. SECTION 3003.2(A)(5), (B)(1) AND (4.2), (C)(5) 21 AND (G) OF THE ACT, AMENDED JUNE 29, 2002 (P.L.559, NO.89), ARE 22 AMENDED TO READ: 23 SECTION 3003.2. ESTIMATED TAX.--(A) THE FOLLOWING TAXPAYERS 24 ARE REQUIRED TO PAY ESTIMATED TAX: 25 * * * 26 (5) EVERY PERSON SUBJECT TO THE TAX IMPOSED BY ARTICLE XI OF 27 THIS ACT SHALL MAKE PAYMENTS OF ESTIMATED [UTILITIES] GROSS 28 RECEIPTS TAX DURING ITS TAXABLE YEAR. 29 * * * 30 (B) THE FOLLOWING WORDS, TERMS AND PHRASES WHEN USED IN 20030H0200B3160 - 85 -

____________ 1 [SECTIONS 3003.2 THROUGH 3003.4 OF THIS ARTICLE] THIS SECTION __________________ 2 AND SECTION 3003.3 SHALL HAVE THE FOLLOWING MEANINGS ASCRIBED TO 3 THEM: 4 (1) "ESTIMATED TAX." ESTIMATED CORPORATE NET INCOME TAX, 5 ESTIMATED CAPITAL STOCK AND FRANCHISE TAX, ESTIMATED MUTUAL 6 THRIFT INSTITUTION TAX, ESTIMATED INSURANCE PREMIUMS TAX, 7 ESTIMATED [UTILITIES] GROSS RECEIPTS TAX OR ESTIMATED PUBLIC 8 UTILITY REALTY SURCHARGE. 9 * * * 10 (4.2) "ESTIMATED [UTILITIES] GROSS RECEIPTS TAX." THE 11 AMOUNT WHICH THE TAXPAYER ESTIMATES AS THE AMOUNT OF TAX IMPOSED 12 BY SECTION 1101 OF ARTICLE XI FOR THE TAXABLE YEAR. 13 * * * 14 (C) ESTIMATED TAX SHALL BE PAID AS FOLLOWS: 15 * * * 16 (5) PAYMENT OF THE ESTIMATED [UTILITIES] GROSS RECEIPTS TAX 17 SHALL BE MADE IN A SINGLE INSTALLMENT ON OR BEFORE THE FIFTEENTH 18 DAY OF MARCH OF THE TAXABLE YEAR. THE REMAINING PORTION OF THE 19 [UTILITIES] GROSS RECEIPTS TAX DUE, IF ANY, SHALL BE PAID UPON 20 THE DATE THE ANNUAL REPORT IS REQUIRED TO BE FILED WITHOUT 21 REFERENCE TO ANY EXTENSION OF TIME FOR FILING THE REPORT. 22 * * * 23 (G) FOR ALL PURPOSES OF [SECTIONS 3003.2 THROUGH 3003.4 OF _______________________________ 24 THIS ARTICLE] THIS SECTION AND SECTION 3003.3, ESTIMATED 25 CORPORATE NET INCOME TAX, ESTIMATED CAPITAL STOCK AND FRANCHISE 26 TAX, ESTIMATED MUTUAL THRIFT INSTITUTIONS TAX, ESTIMATED 27 INSURANCE PREMIUMS TAX, ESTIMATED [UTILITIES] GROSS RECEIPTS TAX 28 AND ESTIMATED PUBLIC UTILITY REALTY SURCHARGE SHALL BE 29 SEPARATELY REPORTED, DETERMINED AND TREATED. 30 * * * 20030H0200B3160 - 86 -

1 SECTION 30. SECTION 3003.3(D) OF THE ACT, AMENDED MAY 7, 2 1997 (P.L.85, NO.7), IS AMENDED TO READ: 3 SECTION 3003.3. UNDERPAYMENT OF ESTIMATED TAX.--* * * 4 (D) NOTWITHSTANDING THE PROVISIONS OF THE PRECEDING 5 SUBSECTIONS, INTEREST WITH RESPECT TO ANY UNDERPAYMENT OF ANY 6 INSTALLMENT OF ESTIMATED TAX SHALL NOT BE IMPOSED IF THE TOTAL 7 AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX MADE ON OR BEFORE THE 8 LAST DATE PRESCRIBED FOR THE PAYMENT OF SUCH INSTALLMENT EQUALS 9 OR EXCEEDS THE AMOUNT WHICH WOULD HAVE BEEN REQUIRED TO BE PAID 10 ON OR BEFORE SUCH DATE IF THE ESTIMATED TAX WERE AN AMOUNT EQUAL 11 TO THE TAX COMPUTED AT THE RATES APPLICABLE TO THE TAXABLE YEAR, 12 INCLUDING ANY MINIMUM TAX IMPOSED, BUT OTHERWISE ON THE BASIS OF 13 THE FACTS SHOWN ON THE REPORT OF THE TAXPAYER FOR, AND THE LAW 14 APPLICABLE TO, THE SAFE HARBOR BASE YEAR, ADJUSTED FOR ANY _ ________ 15 CHANGES TO SECTIONS 401, 601 [AND], 602 AND 1101 ENACTED FOR THE 16 TAXABLE YEAR, IF A REPORT SHOWING A LIABILITY FOR TAX WAS FILED 17 BY THE TAXPAYER FOR THE SAFE HARBOR BASE YEAR. IF THE TOTAL 18 AMOUNT OF ALL PAYMENTS OF ESTIMATED TAX MADE ON OR BEFORE THE 19 LAST DATE PRESCRIBED FOR THE PAYMENT OF SUCH INSTALLMENT DOES 20 NOT EQUAL OR EXCEED THE AMOUNT REQUIRED TO BE PAID PER THE 21 PRECEDING SENTENCE, BUT SUCH AMOUNT IS PAID AFTER THE DATE THE 22 INSTALLMENT WAS REQUIRED TO BE PAID, THEN THE PERIOD OF 23 UNDERPAYMENT SHALL RUN FROM THE DATE THE INSTALLMENT WAS 24 REQUIRED TO BE PAID TO THE DATE THE AMOUNT REQUIRED TO BE PAID 25 PER THE PRECEDING SENTENCE IS PAID. PROVIDED, THAT IF THE 26 SETTLED TAX FOR THE SAFE HARBOR BASE YEAR EXCEEDS THE TAX SHOWN 27 ON SUCH REPORT BY TEN PER CENT OR MORE, THE SETTLED TAX ADJUSTED 28 TO REFLECT THE CURRENT TAX RATE SHALL BE USED FOR PURPOSES OF 29 THIS SUBSECTION, EXCEPT THAT, IF THE SETTLED TAX IS SUBSEQUENTLY 30 RESETTLED, THE AMOUNT OF TAX AS RESETTLED SHALL BE UTILIZED IN 20030H0200B3160 - 87 -

1 THE APPLICATION OF THIS SUBSECTION WITHOUT THE NECESSITY OF THE 2 FILING OF ANY PETITION BY THE DEPARTMENT OR BY THE TAXPAYER. IN 3 THE EVENT THAT THE SETTLED OR RESETTLED TAX FOR THE SAFE HARBOR 4 BASE YEAR EXCEEDS THE TAX SHOWN ON THE REPORT BY TEN PER CENT OR 5 MORE, INTEREST RESULTING FROM THE UTILIZATION OF SUCH SETTLED OR 6 RESETTLED TAX IN THE APPLICATION OF THE PROVISIONS OF THIS 7 SUBSECTION SHALL NOT BE IMPOSED IF, WITHIN FORTY-FIVE DAYS OF 8 THE MAILING DATE OF SUCH SETTLEMENT OR RESETTLEMENT, PAYMENTS 9 ARE MADE SUCH THAT THE TOTAL AMOUNT OF ALL PAYMENTS OF ESTIMATED 10 TAX EQUALS OR EXCEEDS THE AMOUNT WHICH WOULD HAVE BEEN REQUIRED 11 TO BE PAID ON OR BEFORE SUCH DATE IF THE ESTIMATED TAX WERE AN 12 AMOUNT EQUAL TO SUCH SETTLED OR RESETTLED TAX ADJUSTED TO 13 REFLECT THE CURRENT TAX RATE. IN ANY CASE IN WHICH THE TAXABLE 14 YEAR FOR WHICH AN UNDERPAYMENT OF ESTIMATED TAX MAY EXIST IS A 15 SHORT TAXABLE YEAR, IN DETERMINING THE TAX SHOWN ON THE REPORT 16 OR THE SETTLED OR RESETTLED TAX FOR THE SAFE HARBOR BASE YEAR, 17 THE TAX WILL BE REDUCED BY MULTIPLYING IT BY THE RATIO OF THE 18 NUMBER OF INSTALLMENT PAYMENTS MADE IN THE SHORT TAXABLE YEAR TO 19 THE NUMBER OF INSTALLMENT PAYMENTS REQUIRED TO BE MADE FOR THE 20 FULL TAXABLE YEAR. 21 SECTION 31. THE ACT IS AMENDED BY ADDING A SECTION TO READ: ____________________________________________________________ 22 SECTION 3003.15. AUTHORITY TO ATTACH WAGES, COMMISSIONS AND _____________________________________________________________ 23 OTHER EARNINGS.--(A) THE DEPARTMENT OF REVENUE MAY, UPON THE _______________________________________________________________ 24 PRESENTATION OF A WRITTEN NOTICE AND DEMAND CERTIFYING THAT THE _______________________________________________________________ 25 INFORMATION CONTAINED WITHIN IS TRUE AND CORRECT AND CONTAINING _______________________________________________________________ 26 THE NAME OF THE TAXPAYER AND THE AMOUNT OF DELINQUENT STATE TAX ________________________________________________________________ 27 DUE PLUS THE DEPARTMENT'S COSTS, DEMAND, RECEIVE AND COLLECT THE _______________________ 28 AMOUNT FROM ANY ENTITY: _______________________________________________________ 29 (1) EMPLOYING PERSONS OWING DELINQUENT STATE TAXES; OR ____________________________________________________________ 30 (2) HAVING IN ITS POSSESSION UNPAID COMMISSIONS OR EARNINGS 20030H0200B3160 - 88 -

________________________________________________________________ 1 BELONGING TO ANY PERSON OR PERSONS OWING DELINQUENT STATE TAXES. ___________________________________________________________ 2 (B) SUBJECT TO THE LIMITATIONS IN SUBSECTION (C), UPON THE _____________________________________________________________ 3 RECEIPT OF A WRITTEN NOTICE AND DEMAND PURSUANT TO SUBSECTION ___________________________________________________________ 4 (A), AN ENTITY SHALL DEDUCT FROM THE WAGES OF AN INDIVIDUAL ____________________________________________________________ 5 EMPLOYE THE AMOUNT SHOWN ON THE NOTICE AND SHALL FORWARD THE _______________________________________________________________ 6 AMOUNT TO THE DEPARTMENT WITHIN SIXTY DAYS AFTER RECEIPT OF THE _______ 7 NOTICE. ____________________________________________________________ 8 (C) NO MORE THAN TEN PER CENT OF THE WAGES OF AN INDIVIDUAL _______________________________________________________________ 9 EMPLOYE WHO IS A DELINQUENT TAXPAYER MAY BE DEDUCTED AT ANY ONE ________________________________________________________ 10 TIME FOR DELINQUENT STATE TAXES AND COSTS. THE ENTITY IS ________________________________________________________________ 11 ENTITLED TO DEDUCT FROM THE AMOUNT COLLECTED FROM THE INDIVIDUAL ______________________________________________________ 12 EMPLOYE THE COSTS INCURRED BY THE ENTITY FOR THE EXTRA ____________________________________________________________ 13 BOOKKEEPING NECESSARY TO RECORD THE TRANSACTIONS, BUT NOT TO _______________________________________________________________ 14 EXCEED TWO PER CENT OF THE AMOUNT COLLECTED FROM THE INDIVIDUAL ________ 15 EMPLOYE. __________________________________________________________ 16 (D) UPON THE FAILURE OF AN ENTITY TO DEDUCT OR FORWARD AN _________________________________________________________ 17 AMOUNT REQUIRED UNDER THIS SECTION WITHIN THE TIME PERIOD ______________________________________________________________ 18 REQUIRED UNDER SUBSECTION (B), THE ENTITY SHALL PAY THE AMOUNT _________________________________________________________ 19 OF THE DELINQUENT STATE TAX AND COSTS FOR EACH INDIVIDUAL ___________________________________________________________ 20 EMPLOYE WHO IS A DELINQUENT TAXPAYER SUBJECT TO A DEMAND IN ___________________________________________________________ 21 ADDITION TO A PENALTY IN ACCORDANCE WITH SECTION 352(H). AN _______________________________________________________________ 22 ENTITY PAYING DELINQUENT TAXES, COSTS AND A PENALTY PURSUANT TO _________________________________________________________ 23 THIS SUBSECTION SHALL NOT HAVE THE BENEFIT OF ANY STAY OF ___________________________ 24 EXECUTION OR EXEMPTION LAW. _________________________________________________________ 25 (E) THE FOLLOWING WORDS, TERMS AND PHRASES, WHEN USED IN _____________________________________________________________ 26 THIS SECTION, SHALL HAVE THE MEANING ASCRIBED TO THEM IN THIS _______________________________________________________________ 27 SECTION, EXCEPT WHERE THE CONTEXT CLEARLY INDICATES A DIFFERENT ________ 28 MEANING: ____________________________________________________________ 29 "ENTITY." THE UNITED STATES, THE COMMONWEALTH OR ANY OF ITS ________________________________________________________ 30 POLITICAL SUBDIVISIONS, A CORPORATION, AN ASSOCIATION, A 20030H0200B3160 - 89 -

_________________________________ 1 COMPANY, A FIRM OR AN INDIVIDUAL. _____________________________________________________________ 2 "WAGES." ANY WAGES, COMMISSIONS OR EARNINGS OF AN INDIVIDUAL ________ 3 EMPLOYE: ________________________________________________________ 4 (1) WHICH ARE CURRENTLY OWED TO THE INDIVIDUAL EMPLOYE; _____________________________________________________________ 5 (2) WHICH SHALL BECOME DUE WITHIN SIXTY DAYS OF RECEIPT OF A _____________________________________________________ 6 WRITTEN NOTICE AND DEMAND PURSUANT TO SUBSECTION (B); ________________________________________________________ 7 (3) ANY UNPAID COMMISSIONS OR EARNINGS OF AN INDIVIDUAL ______________________________________ 8 EMPLOYE IN THE ENTITY'S POSSESSION; OR ________________________________________________________ 9 (4) ANY UNPAID COMMISSIONS OR EARNINGS OF AN INDIVIDUAL ____________________________________________________________ 10 EMPLOYE THAT COMES INTO THE ENTITY'S POSSESSION WITHIN SIXTY __________________________________________________________ 11 DAYS OF RECEIPT OF A WRITTEN NOTICE AND DEMAND PURSUANT TO _______________ 12 SUBSECTION (A). 13 SECTION 32. BY APRIL 1, 2004, THE DEPARTMENT OF REVENUE 14 SHALL SUBMIT A DETAILED REPORT TO THE CHAIRMAN AND MINORITY 15 CHAIRMAN OF THE APPROPRIATIONS COMMITTEE AND THE FINANCE 16 COMMITTEE OF THE SENATE AND THE CHAIRMAN AND MINORITY CHAIRMAN 17 OF THE APPROPRIATIONS COMMITTEE AND THE FINANCE COMMITTEE OF THE 18 HOUSE OF REPRESENTATIVES OUTLINING THE PLANS AND COSTS 19 CONCERNING A STATEWIDE TAX CLEARANCE FOR LICENSES, PERMITS AND 20 REGISTRATIONS. THE REPORT SHALL INCLUDE ALL OF THE FOLLOWING: 21 (1) THE AMOUNT OF STATE REVENUE NECESSARY TO PERFORM TAX 22 CLEARANCES FOR ALL LICENSES, PERMITS AND REGISTRATIONS FOR 23 THE DEPARTMENT, THE DEPARTMENT OF LABOR AND INDUSTRY, THE 24 DEPARTMENT OF ENVIRONMENTAL PROTECTION, THE DEPARTMENT OF 25 BANKING, THE DEPARTMENT OF STATE, THE INSURANCE DEPARTMENT 26 AND THE PENNSYLVANIA SECURITIES COMMISSION. THE AMOUNT NEEDED 27 SHALL BE ITEMIZED AND ALL COSTS, INCLUDING PERSONNEL, OFFICE 28 EXPENSES, AND OTHER RELATED COSTS, SHALL BE INCLUDED. 29 (2) THE NUMBER OF LICENSES, PERMITS AND REGISTRATIONS 30 FOR EACH AGENCY AND THE COSTS ASSOCIATED WITH THE PROGRAM BY 20030H0200B3160 - 90 -

1 AGENCY. 2 (3) THE SOURCE OF FUNDS WHICH WILL BE UTILIZED TO PAY 3 FOR THE TAX CLEARANCE PROGRAM. 4 (4) THE LEGAL ISSUES CONCERNING THE PROPRIETY OF 5 RESTRICTING OR REVOKING A LICENSE, PERMIT OR REGISTRATION DUE 6 TO THE DELINQUENCY OF A TAX OWED. 7 (5) THE NUMBER OF OTHER STATES WHICH HAVE A SIMILAR LAW 8 IN EFFECT AND THE SUCCESS OR DEFICIENCIES OF THE LAW. 9 (6) PROPOSED DRAFT LEGISLATION CONCERNING TAX CLEARANCE. 10 (7) A DETAILED TIMETABLE ON WHEN SEPARATE TASKS MUST BE 11 COMPLETED FOR FULL IMPLEMENTATION ON AN ESTIMATED START DATE. 12 SECTION 33. THIS ACT SHALL APPLY AS FOLLOWS: 13 (1) THE ADDITION OF SECTION 201(D)(17) OF THE ACT SHALL 14 APPLY TO SALES AT RETAIL AND USES AFTER JUNE 30, 2004. 15 (2) THE AMENDMENT OF SECTION 281.2 OF THE ACT SHALL 16 APPLY TO DEPOSITS INTO THE PUBLIC TRANSPORTATION ASSISTANCE 17 FUND MADE AFTER JUNE 30, 2003. 18 (3) THE AMENDMENT OF SECTION 301(K) OF THE ACT SHALL 19 APPLY TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2003. 20 (4) THE AMENDMENT OF SECTION 302 OF THE ACT SHALL APPLY 21 TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2003. 22 (5) THE AMENDMENT OF SECTION 304(D) OF THE ACT SHALL 23 APPLY TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2003. 24 (6) THE AMENDMENT OF SECTION 330 OF THE ACT SHALL APPLY 25 RETROACTIVELY TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 26 2001. 27 (7) THE AMENDMENT OF SECTION 335 OF THE ACT SHALL APPLY 28 TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2003. 29 (8) THE FOLLOWING SHALL APPLY: 30 (I) THE DELETION OF THE PHRASE "OR A RELATED 20030H0200B3160 - 91 -

1 BUSINESS TRUST WHICH CONFINES ITS ACTIVITIES IN THIS 2 COMMONWEALTH TO THE MAINTENANCE, ADMINISTRATION, AND 3 MANAGEMENT OF INTANGIBLE INVESTMENTS AND ACTIVITIES OF 4 REAL ESTATE INVESTMENT TRUSTS OR QUALIFIED REAL ESTATE 5 INVESTMENT TRUST SUBSIDIARIES" FROM SECTION 401(1)1 OF 6 THE ACT SHALL APPLY TO TAX YEARS BEGINNING AFTER DECEMBER 7 31, 2003. 8 (II) THE DELETION OF THE SENTENCE "A BUSINESS TRUST 9 WHICH IS A QUALIFIED REAL ESTATE INVESTMENT TRUST 10 SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL REVENUE 11 CODE OF 1986 (26 U.S.C. § 856(I)) SHALL BE TREATED AS 12 PART OF THE REAL ESTATE INVESTMENT TRUST WHICH OWNS ALL 13 OF THE STOCK OF THE QUALIFIED REAL ESTATE INVESTMENT 14 TRUST SUBSIDIARY." IN SECTION 401(1)1 OF THE ACT SHALL 15 APPLY RETROACTIVELY TO JUNE 29, 2002, AND SHALL BE 16 CONSIDERED AS A CODIFICATION OF THE LAW THEN IN EFFECT. 17 (9) THE AMENDMENT OF SECTION 402.2(B) OF THE ACT SHALL 18 APPLY TO TAX YEARS BEGINNING AFTER DECEMBER 31, 2003. 19 (10) THE ADDITION OF SECTION 403.2 OF THE ACT SHALL 20 APPLY TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2003. 21 (11) THE FOLLOWING SHALL APPLY: 22 (I) THE AMENDMENT OF CLAUSE (A)(4) IN THE DEFINITION 23 OF "CORPORATION" IN SECTION 601(A) OF THE ACT SHALL APPLY 24 RETROACTIVELY TO JUNE 29, 2002, AND SHALL BE CONSIDERED 25 AS A CODIFICATION OF THE LAW THEN IN EFFECT. 26 (II) THE ADDITION OF CLAUSE (A)(6) AND (7) IN THE 27 DEFINITION OF "CORPORATION" IN SECTION 601(A) OF THE ACT 28 SHALL APPLY TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 29 2003. 30 (III) THE DELETION OF THE PHRASE "OR A RELATED 20030H0200B3160 - 92 -

1 BUSINESS TRUST WHICH CONFINES ITS ACTIVITIES IN THIS 2 COMMONWEALTH TO THE MAINTENANCE, ADMINISTRATION AND 3 MANAGEMENT OF INTANGIBLE INVESTMENTS AND ACTIVITIES OF 4 REAL ESTATE INVESTMENT TRUSTS OR QUALIFIED REAL ESTATE 5 INVESTMENT TRUST SUBSIDIARIES" FROM CLAUSE (B)(1) IN THE 6 DEFINITION OF "CORPORATION" IN SECTION 601(A) OF THE ACT 7 SHALL APPLY TO TAX YEARS BEGINNING AFTER DECEMBER 31, 8 2003. 9 (IV) THE DELETION OF THE SENTENCE "A BUSINESS TRUST 10 WHICH IS A QUALIFIED REAL ESTATE INVESTMENT TRUST 11 SUBSIDIARY UNDER SECTION 856(I) OF THE INTERNAL REVENUE 12 CODE OF 1986 (26 U.S.C. § 856(I)) SHALL BE TREATED AS 13 PART OF THE REAL ESTATE INVESTMENT TRUST WHICH OWNS ALL 14 OF THE STOCK OF THE QUALIFIED REAL ESTATE INVESTMENT 15 TRUST SUBSIDIARY." IN CLAUSE (B)(1) IN THE DEFINITION OF 16 "CORPORATION" IN SECTION 601(A) OF THE ACT SHALL APPLY 17 RETROACTIVELY TO JUNE 29, 2002, AND SHALL BE CONSIDERED 18 AS A CODIFICATION OF THE LAW THEN IN EFFECT. 19 (12) THE AMENDMENT OF SECTION 1101 OF THE ACT SHALL 20 APPLY TO GROSS RECEIPTS DERIVED FROM TRANSACTIONS OCCURRING 21 AFTER DECEMBER 31, 2003. 22 (12.1) THE ADDITION OF SECTION 1112-A OF THE ACT SHALL 23 APPLY TO DEPOSITS INTO THE PUBLIC TRANSPORTATION ASSISTANCE 24 FUND MADE AFTER JUNE 30, 2003. 25 (13) THE AMENDMENT OF SECTION 1704-B(A) OF THE ACT SHALL 26 APPLY TO TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2004. 27 (14) THE AMENDMENT OR ADDITION OF SECTION 1704-B(C), (D) 28 AND (E) OF THE ACT SHALL APPLY TO CREDITS AWARDED AFTER 29 DECEMBER 31, 2002. 30 (15) THE AMENDMENT OF SECTION 1709-B(A) OF THE ACT SHALL 20030H0200B3160 - 93 -

1 APPLY TO CREDITS AWARDED AFTER DECEMBER 31, 2003. 2 (16) THE AMENDMENT OF SECTION 1711-B OF THE ACT SHALL 3 APPLY TO CREDITS AWARDED AFTER DECEMBER 31, 2003. 4 (17) THE FOLLOWING PROVISIONS SHALL APPLY TO THE ESTATES 5 OF DECEDENTS WHO DIE AFTER JUNE 30, 2002: 6 (I) THE AMENDMENT OF THE DEFINITIONS OF "FEDERAL 7 ESTATE TAX," AND "TRANSFER OF PROPERTY FOR THE SOLE USE" 8 IN SECTION 2102 OF THE ACT. 9 (II) THE AMENDMENT OF SECTION 2111(R) OF THE ACT. 10 (III) THE AMENDMENT OF SECTION 2117 OF THE ACT. 11 (IV) THE AMENDMENT OF SECTION 2145 OF THE ACT. 12 (18) THE AMENDMENT OF SECTION 2301 OF THE ACT SHALL 13 APPLY TO DEPOSITS INTO THE PUBLIC TRANSPORTATION ASSISTANCE 14 FUND MADE AFTER JUNE 30, 2003. 15 (19) THE ADDITION OF SECTION 2302 OF THE ACT SHALL APPLY 16 TO DEPOSITS INTO THE PUBLIC TRANSPORTATION ASSISTANCE FUND 17 MADE AFTER JUNE 30, 2003. 18 SECTION 34. THE PROVISIONS OF 66 PA.C.S. § 2810(C)(7) ARE 19 REPEALED. 20 SECTION 35. THIS ACT SHALL TAKE EFFECT AS FOLLOWS: 21 (1) THE AMENDMENT OR ADDITION OF SECTIONS 1206, 1206.1, 22 1211, 1215 AND 1216 OF THE ACT SHALL TAKE EFFECT JANUARY 7, 23 2004. 24 (2) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT 25 IMMEDIATELY. A27L72JLW/20030H0200B3160 - 94 -