The following words and phrases when used in this act shall have the meanings given to them in this section unless the context clearly indicates otherwise:
"Affiliated group." One or more chains of corporations connected through stock ownership with a common parent corporation if:
(1) Stock possessing at least 80% of the voting power of all classes of stock and at least 80% of each class of the nonvoting stock of each corporation, except the common parent corporation, is owned directly by one or more of the other corporations.(2) The common parent corporation owns directly stock possessing at least 80% of the voting power of all classes of stock and at least 80% of each class of the nonvoting stock of at least one of the other corporations.As used in this definition, "stock" does not include nonvoting stock which is limited and preferred as to dividends.
"Business." Carrying on or exercising, for gain or profit, within a city of the first class, any trade, business, including financial business as hereinafter defined, profession, vocation or commercial activity or making sales to persons within such city of the first class. "Business" shall not include the following:
(1) Any business conducted by a nonprofit corporation or association organized for religious, charitable or educational purposes, the business of any political subdivision or of any authority created and organized under and pursuant to law of this Commonwealth.(2) The specific business conducted by any public utility operating under the laws, rules and regulations administered by the Pennsylvania Public Utility Commission or conducted by a business subject to the jurisdiction of the Interstate Commerce Commission of furnishing or supplying service or services at the rates specified in its tariffs.(3) The business of any insurance company, association or exchange, or any fraternal, benefit or beneficial society of any other state under the laws of which insurance companies, associations or exchanges or fraternal, benefit or beneficial societies of this Commonwealth doing business in such other state are subjected, by reason of the tax imposed by this act, to additional or further taxes, fines, penalties or license fees by such other state.(4) Any employment for a wage or salary."Collector." The receiver of taxes in cities of the first class.
"Cost of goods." In the case of a retailer or wholesaler, the cost of goods, wares, commodities and merchandise purchased by the retailer or wholesaler and resold by him, such cost to include all freight-in charges.
"Cost of labor." In the case of a retailer or wholesaler, the cost of the labor of his employees used in receiving, storing, shipping and delivering the goods, wares, commodities or merchandise purchased for resale and the cost of the salaries or commissions paid to his employees for making the actual sales of the goods, wares, commodities or merchandise.
"Dividends." Any distribution made by a corporation to its shareholders in respect of its stock, whether ordinary, extraordinary or in liquidation.
"Financial business." Other than the business of any regulated industry, the services and transactions of private banks and bankers; building and loan associations; savings and loan associations; credit unions; savings banks; banks; bank and trust companies; trust companies; investment companies registered as such with the Federal Securities and Exchange Commission; holding companies; persons registered under the act of December 5, 1972 (P.L. 1280, No. 284), known as the Pennsylvania Securities Act of 1972, including traders; dealers and brokers in money, credits, commercial paper, bonds, notes, securities and stocks and monetary metals; factors and commission merchants.
"Manufacturer." A person whose business is the sale of goods, commodities, wares or merchandise of its own manufacture, growth or production.
"Net income."
(1) Net income shall be, at the option of the taxpayer, which option shall not be revocable by the taxpayer, any one of the following:(i) The taxable income from any business activity as returned to and ascertained by the Federal Government prior to giving effect to the exclusion for dividends received and net operating loss, subject to the following adjustments: (A) A deduction for dividends, interest and royalty income and other receipts excluded from the definition of "receipts" under paragraphs (5) and (7) of that definition, but only to the extent that such dividends, interest, royalty and other receipts are included in taxable income as returned to and ascertained by the Federal Government as heretofore defined.(B) A deduction for net income attributable to receipts that are excluded under paragraph (6) of the definition of "receipts" of this section.(C) A deduction for income received from all obligations of the United States, including stocks, bonds and Treasury notes and other obligations of the United States.(D) An increase for interest expense attributable to these stocks, bonds and Treasury notes and other obligations of the United States or any of its political subdivisions which is exempt from taxation of income under the laws of the United States or of the Commonwealth. The increase shall not exceed the deduction claimed in clause (C).(E) A deduction for net income of persons registered under the Pennsylvania Securities Act of 1972 other than the net income attributable to commissions and similar charges on account of transactions effected for persons residing or having their principal place of business within a city of the first class.(ii) As defined by the council of any city of the first class.(2) In the case of a corporation participating in the filing of a consolidated corporate return to the Federal Government, net income shall mean the income from any business activity which would have been returned to and ascertained by the Federal Government, if separate returns had been made to the Federal Government, subject, however to any correction thereof for fraud, evasion or error as finally ascertained by the Federal Government. Notwithstanding any other provision of this act, no taxpayer shall be required or permitted to participate in the filing of a consolidated or combined tax return under this act.(3) The collector shall establish rules and regulations and methods of apportionment and allocation and evaluation so that only that part of such net income or net operating loss which is properly attributable and allocable to the doing of business in the city of the first class levying the tax shall be taxed hereunder. The collector may make an apportionment and allocation, with due regard to the nature of the business concerned, on the basis of mileage, the ratio of the taxable receipts of the taxpayer from within the city to the total receipts of the taxpayer, the ratio of the value of the tangible personal and real property of the taxpayer owned or leased and situated in the city levying the tax to the total tangible personal and real property of the taxpayer wherever owned and situated, the ratio of the wages, salaries, commissions and other compensation paid by the taxpayer within the city levying the tax to the total wages, salaries, commissions and other compensation paid by the taxpayer, and any other method or methods of apportionment and allocation, other than the foregoing, calculated to effect a fair and proper apportionment and allocation. The net income of a person which is described as being subject to a tax pursuant to Article VII, VIII, IX or XV of the act of March 4, 1971 (P.L. 6, No. 2), known as the Tax Reform Code of 1971, shall be allocated and apportioned to a city of the first class in accordance with a fraction of which the numerator shall be "receipts" as defined and limited in this section and the denominator shall be receipts regardless of whether received in or apportionable to the city of the first class.(4) After apportioning and allocating net income, apportioned and allocated net operating losses carried forward shall be deducted."Net operating loss."
(1) In the case of a person conducting its entire business within a city of the first class, any net losses incurred from the operation of its business as returned to and ascertained by the Federal Government prior to giving effect to the exclusion for dividends received and net operating loss subject to the same adjustments made applicable to net income in this section. In the case of a person conducting its business both within and without a city of the first class, any net operating loss incurred which is carried forward to another tax year shall be allocated and apportioned in the same manner as net income prior to its being deducted from apportioned and allocated net income in the subsequent tax year. Apportionment and allocation of net operating loss shall be based upon allocation and apportionment factors applicable to the year in which the net operating loss was incurred.(2) Net operating losses incurred in another tax period may be carried over for 20 tax years following the year in which it was incurred. The earliest net loss shall be carried over to the earliest taxable year to which it may be carried."Person." Any individual, partnership, limited partnership, association, corporation, estate or trust. Whenever used in any provision prescribing or imposing a penalty, the term "person," as applied to associations, shall mean the partners or members thereof and, as applied to corporations, the officers thereof.
"Receipts." Cash, credits, property of any kind or nature, received from conducting any business or by reason of any sale made, including resales of goods, wares or merchandise taken by a dealer as a trade-in or as part payment for other goods, wares or merchandise or services rendered or commercial or business transactions, without deduction therefrom on account of the cost of property sold, materials used, labor, service or other cost, interest or discount paid or any other expense. For the purpose of determining receipts from the business of insurance, such receipts shall mean those from premiums received from risks within the city of the first class, whether by mutual or stock companies, domestic or foreign, without any deductions therefrom for any cost or expenses whatsoever; except, premiums shall not include return premiums, dividends paid or credited to policyholders if such dividends are in the nature of an adjustment of the premiums charged, and premiums received for reinsurance. Receipts from a person engaged in the business of insurance shall also include receipts from rental real estate situated in cities of the first class but shall not include interest, dividend and capital gain receipts. Nothing in this definition shall preclude the taxation of other nonpremium business receipts of persons engaged in the business of insurance. Receipts of any business shall exclude:
(1) The amount of any allowance made for goods, wares or merchandise taken by a dealer as a trade-in or as part payment for other goods, wares and merchandise in the usual and ordinary course of his business.(2) In the case of a financial business or a person which is described as being subject to a tax imposed pursuant to Article VII, VIII or XV of the Tax Reform Code of 1971, the cost of securities and other property sold, exchanged, paid at maturity or redeemed; moneys or credits received in repayment of the principal amount of deposits, advances, credits, loans and other obligations; interest received on account of deposits, advances, credits, loans and other obligations made to persons resident or having their principal place of business outside such city; interest received on account of other deposits, advances, credits, loans and other obligations but only to the extent of interest expense attributable to such deposits, advances, credits, loans and other obligations and shall also exclude payments received on account of shares purchased by shareholders.(3) In the case of a broker, any commissions paid by him to another broker on account of a purchase or sales contract initiated, executed or cleared in conjunction with such other broker, except where either is an employee of the other.(4) Receipts by dealers from sales to other dealers in the same line, where the dealer transfers title or possession at the same price for which he acquired the goods, wares or merchandise.(5) Dividends, interest and royalties received by one corporation from:(i) a corporation of the same affiliated group; or(ii) a corporation of which the receiving corporation owns at least 20% of the voting power of all classes of stock and at least 20% of each class of nonvoting stock.(6) Receipts from the specific business conducted by any public utility operating under the laws, rules and regulations administered by the Pennsylvania Public Utility Commission or conducted by a business subject to the jurisdiction of the Interstate Commerce Commission of furnishing or supplying service or services at the rates specified in its tariffs.(7) Receipts by a corporation which is a member of an affiliated group from other members of the same affiliated group.(8) Commissions and similar charges received by persons registered under the Pennsylvania Securities Act of 1972 on account of transactions effected for persons resident and having their principal place of business outside the city of the first class.(9) All or a portion of such other allowances, costs, moneys or credits as are specifically excluded by a city council of a city of the first class and which would otherwise be includable within this definition."Regulated industry." A person subject to a tax pursuant to Article VII, VIII, IX or XV of the Tax Reform Code of 1971 or any public utility operating under the laws, rules and regulations administered by the Pennsylvania Public Utility Commission, all or a portion of the activities of which is to furnish or supply service or services at the rates specified in its tariffs.
"Retailer." A person whose business is the sale of goods, commodities, wares or merchandise to persons who are not dealers or vendors of those goods, commodities, wares or merchandise.
"Sale." Transfer of title to goods, wares, commodities or merchandise, regardless of where accomplished, the delivery of which is made by the seller within a city of the first class. "Sale" shall not include any intra-company transfers.
"Taxable receipts."
(1) Receipts, as defined and limited in this section, within the limits of a city of the first class.(2) Taxable receipts shall exclude the following:(i) Receipts or portion of receipts attributable to any sale involving the bona fide delivery of goods, commodities, wares or merchandise to a location regularly maintained by the other party to the transaction outside the limits of a city of the first class and not for the purpose of evading or avoiding payment of the tax, or any portion thereof, imposed under this act.(ii) Receipts or portion of receipts received for any services actually performed outside the limits of a city of the first class and not for the purpose of evading or avoiding payment of the tax, or any portion of it imposed, under this act.(3) Taxable receipts of persons making sales or rendering services both inside and outside a city of the first class, or both, are to be segregated.(4) In the event, and only in the event, taxable receipts as defined in this definition are incapable of segregation, the collector shall establish rules and regulations and methods of allocation and apportionment and evaluation so that only that part of such taxable receipts which is properly attributable to the doing of business within a city of the first class levying this tax shall be taxed hereunder."Tax measurement year." The fiscal or calendar year by which the person engaging in business keeps its books and records for Federal tax purposes.
"Tax year." A 12-month period from January 1 to December 31.
"Wholesaler." A person whose business is the sale of goods, commodities, wares or merchandise to dealers or vendors of those goods, commodities, wares or merchandise.
1984, May 30, P.L. 345, No. 69, § 2, imd. effective. Amended 2002, Dec. 30, P.L. 2089, No. 237, § 1, imd. effective; 2022, Nov. 3, P.L. 1672, No. 103, § 1, imd. effective.