§ 19-3204. Conditions for Exemptions, Abatements and Credits. 658

   (1)   Qualifications. 659

      (a)   Other than in the Philadelphia Strategic Development Area: In order to qualify each year for a tax exemption, abatement or credit under this Chapter, a business shall own or lease real property in the Zone from which the business actively conducts a trade, profession or business. The qualified business shall receive certification from DCED that the business is located, and is in the active conduct of a trade, profession or business, within the Zone. The business shall obtain annual renewal of the certification from DCED to continue to qualify under this Section. A copy of the certification shall accompany the filing of any return or other required application with the City in order for the qualified business to obtain any tax exemption, abatement or credit provided under this Chapter.

      (b)   In the Philadelphia Strategic Development Area: In order to qualify for tax exemptions, deductions, abatements or credits under this article, a business must own or lease real property in a strategic development area on which the business actively conducts a trade, profession or business involving energy, bioscience or manufacturing, or a related activity, and meet one of the following criteria:

         (.1)   Create or maintain a minimum of 500 jobs within the first three years of full operation within the strategic development area.

         (.2)   Invest a minimum of forty-five million dollars ($45,000,000) in capital investment in the property located in the strategic development area within the first three years of full operation.

   (2)   Approval by DCED. Any taxpayer claiming an exemption, abatement or credit under this Chapter must, by December 31 of each year for which the exemption, abatement or credit is claimed, apply for and receive approval from DCED of eligibility for the benefit, as set forth in Sections 906 and 907 of the Act, as amended, or Section 906 of the EDD Act, as applicable. In the Philadelphia Strategic Development Area, a copy of the approval shall accompany the filing of any return or other required application with the City in order for the qualified business to obtain any tax exemption, abatement or credit provided under this Chapter. 660

   (3)   Relocation.

      (a)   Any business that relocates into the Zone, other than into the Economic Development District or into the Philadelphia Strategic Development Area, from outside the Zone shall not receive any of the exemptions, abatements or credits set forth in this Chapter unless that business either: 661

         (.1)   Increases full-time employment by at least twenty percent (20%) in the first full year of operation within the Zone; or

         (.2)   Makes a capital investment in the property located within the Zone equivalent to ten percent (10%) of the gross revenues of that business in the immediately preceding calendar or fiscal year.

      (b)   Any business that relocates into the Economic Development District from outside the Economic Development District shall not receive any of the exemptions, abatements or credits set forth in this Chapter unless that business has entered into a lease agreement for property located within the Economic Development District consistent with all of the following:

         (.1)   The net present value of the lease agreement is at least fifty million dollars ($50,000,000).

         (.2)   The lease agreement is for at least 500,000 square feet of property.

         (.3)   The term of the lease agreement is at least equivalent to the balance of the duration of the designation of the property as an economic development district.

         (.4)   Aggregate payments under the lease agreement to support new capital investment is at least equivalent to five percent (5%) of the gross revenues of the business in the immediately preceding calendar or fiscal year.

         (.5)   The property will be used for food distribution.

         (.6)   The property consists of at least 85 acres.

         (.7)   The property is publicly owned.

      (c)   The Department may promulgate regulations establishing rules regarding the determination of whether a business is subject to these relocation rules, including rules concerning businesses that change their form of doing business in order to avoid these relocation rules, and rules concerning businesses that cease operations outside the Zone after commencement of operations inside the Zone.

   (4)   No abatement or exemption shall be available under Section 19-1303.3 of this Code, relating to Exemptions from Real Estate Taxes on Improvements to Deteriorated Industrial, Commercial or Other Business Properties, with respect to any real property or improvements in the Economic Development District until calendar year 2019. Any period remaining in an abatement or exemption period that otherwise would have been available but for this subsection shall be available to the taxpayer commencing on January 1, 2019, provided that no abatement, credit or exemption shall be available for any years that would have been subject to abatement but for this subsection. No exemption, abatement or credit shall be taken under this Chapter with respect to any property or business activity in the Economic Development District unless the taxpayer shall have first submitted to the Board of Revision of Taxes, with a copy to the Department, a binding acknowledgement that acceptance of any exemption, abatement or credit under this Chapter shall constitute an irrevocable abandonment of any claim to an abatement of real property taxes under Section 19-1303.3 of this Code beyond that provided in this subsection; provided further that such acknowledgement shall be filed with the Recorder of Deeds and shall be binding on successor owners.

   (5)   Opportunity Plans. 662 To qualify for tax exemptions, abatements or credits under this Chapter, a business shall agree to the terms and conditions of an Opportunity Plan, as defined in the Koz Act (73 P.S. § 820.103), and which meets the requirements of the Koz Act (73 P.S. § 820.302(a)). The Opportunity Plan shall at a minimum, require:

      (a)   Bid and RFP specifications for design and construction services in the zone, include a provision requiring professional service providers and construction contractors to indicate their capacity to sponsor apprenticeship opportunities for students enrolled in School District Career and Technical Education Programs;

      (b)   Owner-operators of businesses in the zone, agree to provide internships to students enrolled in School District Career and Technical Education Programs; and

      (c)   Solicitations for tenants to operate a business in the zone, include a provision requiring tenant- operators to indicate their capacity to sponsor internship, training and permanent employment opportunities for students enrolled in School District Career and Technical Education Programs.

 

Notes

658	Caption amended, Bill No. 010092 (approved February 28, 2001). Amended, Bill No. 050504-A (approved July 8, 2005). See note 594 for effective date provisions.
659	Amended, Bill No. 071081 (approved December 21, 2007). See note 613 for effective date provisions.
660	Added and subsection (3) renumbered, Bill No. 010092 (approved February 28, 2001); amended, Bill No. 071081 (approved December 21, 2007). See note 613 for effective date provisions.
661	Amended, Bill No. 071081 (approved December 21, 2007). See note 613 for effective date provisions.
662	Added, Bill No. 180935 (became law January 24, 2019).

§ 19-3205. Conditions for Real Estate Tax Exemption. 663

   (1)   A resident of real property located in the Zone, other than in the Economic Development District and Strategic Development Area, shall not be entitled to an abatement of real estate taxes on such property unless such resident invests in improvements to the real property an amount equal to no less than twenty-five percent (25%) of all real property taxes which would have been due if the real property was not located in the Zone. 664

   (2)   A nonresident owner of real property located in the Zone, other than in the Economic Development District and Strategic Development Area, who leases such property directly or indirectly to a person for residential use shall not be entitled to an abatement of real estate taxes on such property unless such nonresident owner invests in improvements to the real property no less than fifty percent (50%) of all real property taxes which would have been due if the real property was not located in the Zone. 665

   (3)   Application deadlines.

      (a)   Any taxpayer requesting a real estate tax abatement pursuant to this Chapter shall notify the Board of Revision of Taxes in writing on a form provided by the Board of Revision of Taxes within 30 days of the designation of the Zone by DCED or within 30 days of the transfer of ownership of the real property subject to abatement. A copy of the abatement request shall be forwarded by the Board of Revision of Taxes to the Department.

      (b)   A taxpayer applying outside the prescribed deadline set forth in subsection (a) above shall nonetheless be granted a real estate tax abatement according to the provisions of this Chapter, beginning in the calendar year next following the year of application, but only if one of the following conditions is met:

         (.1)   An active trade or business is being conducted on the subject real property, but only such portion of the property that is devoted to the active trade or business shall be eligible for the real estate tax abatement.

         (.2)   Substantial improvements to the subject real property are being made, or have been made since the time of the late application, but only such portion of the property upon which the improvements are being or have been erected or performed shall be eligible for the real estate tax abatement.

      (c)   The provisions of this subsection relating to application deadlines shall not apply to real property located in the Philadelphia Keystone Opportunity Expansion Zone, the Philadelphia Keystone Opportunity Improvement Zone or the Economic Development District. 666

   (4)   Interest and penalties. If the department finds that a taxpayer claimed an abatement of real property tax to which the taxpayer was not entitled under this Chapter, the taxpayer shall be liable for the abated taxes and subject to interest, additions and penalties under Section 19-1303 of this Code.

 

Notes

663	Amended, Bill No. 050504-A (approved July 8, 2005). See note 594 for effective date provisions.
664	Amended, Bill No. 071081 (approved December 21, 2007). See note 613 for effective date provisions.
665	Amended, Bill No. 071081 (approved December 21, 2007). See note 613 for effective date provisions.
666	Added, Bill No. 010092 (approved February 28, 2001); amended, Bill No. 030242 (approved May 29, 2003). See note 607 for effective date provisions.

§ 19-3206. Conditions for Use and Occupancy Tax Exemption.

   (1)   A taxpayer claiming an exemption from realty use and occupancy tax under this Chapter shall cause to be filed the required returns pursuant to Section 19-1806 and shall calculate on such return the tax liability that would be owing if the subject property were not located in the Zone.

§ 19-3207. Conditions for Business Income and Receipts Tax Credit. 667

   (1)   The Department shall establish rules and regulations and methods of apportionment and allocation so that only that part of such net income and receipts attributable to business activity conducted directly by a qualified business within the Zone shall be entitled to a credit against the business income and receipts tax.

   (2)   A qualified business, when filing its business income and receipts tax return, shall first compute its receipts and net income in conformity with Chapter 19-2600 with no adjustments or subtractions for receipts or net income attributable to business activity in the Zone, prior to calculating any credit under this Chapter.

   (3)   The credit against business income and receipts tax allowed to a taxpayer in any tax year under this Chapter shall not exceed the business income and receipts tax liability of the taxpayer for such tax year, and shall not carry forward to any other tax year.

 

Notes

667	Caption and Section amended, Bill No. 110758 (approved December 21, 2011), effective May 1, 2012.

§ 19-3208. Conditions for Net Profits Tax Exemption.

   (1)   The Department shall establish rules and regulations and methods of apportionment and allocation so that only such part of net profits attributable to business activity conducted within the Zone directly by the taxpayer shall be entitled to a credit against net profits tax.

   (2)   A taxpayer, when filing its net profits tax return, shall first compute its net profits in conformity with Chapter 19-1500 or 19-2800 with no adjustments or subtractions for net profits attributable to business activity in the Zone, prior to calculating any credit under this Chapter.

   (3)   The credit against net profits tax allowed to a taxpayer in any tax year under this Chapter shall not exceed the net profits tax liability of the taxpayer for such tax year, and shall not carry forward to any other tax year.

§ 19-3209. Conditions for Sales and Use Tax Exemption.

   (1)   Construction contracts. For any construction contract performed within the Zone, the exemption from sales and use tax under this Chapter shall only apply to the sale at retail or use of building machinery and equipment to a qualified business, or to a construction contractor pursuant to a construction contract with a qualified business, for the exclusive use, consumption and utilization by the qualified business at its facility in the Zone. For the purposes of this exemption, building machinery and equipment shall include distribution equipment purchased for the exclusive use, consumption and utilization in a facility located within the Zone. 668

   (2)   Sales at retail of tangible personal properly and services shall be defined in accordance with Article II of the Tax Reform Code of 1971, as amended.

 

Notes

668	Amended, Bill No. 010092 (approved February 28, 2001).

§ 19-3210. Conditions for Wage Tax Exemption. 669

   (1)   Residency. In order to qualify each year for an exemption from wage tax under this Chapter, a person shall be domiciled and shall reside in the Zone for a period of 184 consecutive days during each taxable year, which may begin on the date of designation of the Zone by DCED or on the date the person first resides within the Zone.

   (2)   Except as provided in subsection (3) below, and notwithstanding any exemption provided by this Chapter, the employer of any person claiming such exemption shall remain subject to Sections 19-1504 and 19-2806 relating to tax withholding. Any taxpayer claiming an exemption from wage tax pursuant to this Chapter may file a claim for refund with the Department of Revenue pursuant to Section 19-1703. 670

   (3)   Notwithstanding the provisions of subsection (2) above, an employer shall not be subject to the provisions of Sections 19-1504 and 19-2806, relating to tax withholding, with respect to any employee who is resident of the Philadelphia Strategic Development Area, so long as the employee has furnished to his or her employer information, as prescribed by the Department, necessary for the employer to withhold the correct amount of tax, including any changes to such information within 20 days after the change, unless the employer reasonably and in good faith believes such information to be inaccurate. Within 20 days after an employer receives any information from an employee requesting exemption from withholding, the employer shall forward a copy of such information to the Department. The information shall not be given retroactive effect for withholding purposes. 671

 

Notes

669	Amended, Bill No. 010092 (approved February 28, 2001).
670	Amended, Bill No. 071081 (approved December 21, 2007). See note 613 for effective date provisions.
671	Added, Bill No. 071081 (approved December 21, 2007). See note 613 for effective date provisions.

§ 19-3211. Regulations.

   (1)   The Department and, where applicable, the Board of Revision of Taxes, may promulgate regulations to implement any of the abatements, credits or exemptions provided for under this Chapter. Such regulations shall be consistent with the purposes of the Act and this Chapter and may include, but need not be limited to, provisions relating to applications, required documentation and recordkeeping, enforcement and compliance.