Section 820.517 - Bank and trust company shares tax, alternative bank and trust company shares tax and mutual thrift institutions tax(a) Credits.-- For tax years that begin on or after January 1, 2001, an institution that is a qualified business under this act may claim a credit against the tax imposed by Article VII or XV of the Tax Reform Code of 1971 for tax liability attributable to business activity conducted within the subzone or expansion subzone in the taxable year. For tax years that begin on or after January 1, 2004, an institution which is a qualified business under this act may claim a credit against the tax imposed by Article VII or XV of the Tax Reform Code of 1971 for tax liability attributable to business activity conducted within an improvement subzone in the taxable year. No credit may be claimed for business activity conducted prior to designation of the real property as part of a subzone or expansion subzone. The business activity must be conducted directly by an institution in the subzone, improvement subzone or expansion subzone in order for the institution to claim the tax credit.(b) Tax liability.--The institution's tax liability attributable to business activity conducted within a subzone, improvement subzone or expansion subzone shall be determined by multiplying the taxable amount of its shares or net income that is attributable to business activity conducted within the subzone, improvement subzone or expansion subzone by the rate of tax imposed under Article VII or XV of the Tax Reform Code of 1971 for the taxable year. The institution shall compute the Pennsylvania taxable amount of its shares or net income in conformity with Article VII or XV of the Tax Reform Code of 1971.(c) Determination of attributable taxable liability.--The taxable shares or the income of an institution that is a qualified business shall be apportioned to the subzone, improvement subzone or expansion subzone by multiplying the Pennsylvania taxable shares or income by a fraction, the numerator of which is the payroll factor plus the receipts factor plus the deposits factor and the denominator of which is three.(1) The payroll factor is a fraction, the numerator of which is the total wages paid in a subzone, improvement subzone or expansion subzone during the tax period by the taxpayer and the denominator of which is the total wages paid in this Commonwealth during the period. Wages are paid in a subzone, improvement subzone or expansion subzone if they are paid to an employee having a regular presence in the subzone, improvement subzone or expansion subzone.(2) The receipts factor is a fraction, the numerator of which is total receipts of the taxpayer in a subzone, improvement subzone or expansion subzone during the tax period and the denominator of which is the total receipts located in this Commonwealth. Receipts do not include principal repayments on loans or credit, travel and entertainment cards. Receipts from the sale or disposition of intangible and tangible property include only the net gain received from the sale or disposition. The location of receipts shall be determined as follows: (i) Receipts from loans primarily secured by real property are located in a subzone, improvement subzone or expansion subzone if the predominant portion of the real property is located in the subzone, improvement subzone or expansion subzone and the application and negotiation or administrative responsibility occurs at a qualified business.(ii) Receipts from loans not primarily secured by real property are located in a subzone, improvement subzone or expansion subzone if the obligor, in the case of an individual, resides in a subzone or expansion subzone or, in the case of a corporation, if the corporation's commercial domicile is located in a subzone, improvement subzone or expansion subzone and the application and negotiation or administrative responsibility occurs at a qualified business.(iii) Receipts from performance of services are located in a subzone, improvement subzone or expansion subzone if the services are performed in the subzone, improvement subzone or expansion subzone. If services are performed partly within the subzone, improvement subzone or expansion subzone and partly outside the subzone, improvement subzone or expansion subzone, the subzone, improvement subzone or expansion subzone receipts shall be the ratio that the time spent in performing the services in the subzone, improvement subzone or expansion subzone bears to the total time spent in performing the services in this Commonwealth. Time spent in performing services in the subzone, improvement subzone or expansion subzone is the time spent by employees having a regular presence in the subzone, improvement subzone or expansion subzone in performing the services.(iv) Receipts from lease transactions are located in a subzone, improvement subzone or expansion subzone if the leased property is located in the subzone, improvement subzone or expansion subzone.(v) Receipts from interest or service charges, excluding merchant discounts, from credit, travel and entertainment card receivables and credit card holders' fees are located in a subzone, improvement subzone or expansion subzone if the credit card holder, in the case of an individual, resides in a subzone, improvement subzone or expansion subzone or, in the case of a corporation, if the corporation's commercial domicile is located in a subzone, improvement subzone or expansion subzone.(vi) Receipts from interest, dividends and net gains from the sale or disposition of intangibles, exclusive of those receipts described elsewhere in this paragraph, are located in a subzone, improvement subzone or expansion subzone if the institution maintains a qualified business that treats such intangibles as assets on its books or records.(vii) Receipts from fees or charges from the issuance of traveler's checks and money orders are located in a subzone, improvement subzone or expansion subzone if the traveler's checks or money orders are issued in the subzone, improvement subzone or expansion subzone.(viii) Receipts from sales of tangible property are located in a subzone, improvement subzone or expansion subzone if the property is delivered or shipped to a purchaser located in a subzone, improvement subzone or expansion subzone, regardless of the free on board point or other conditions of the sale.(ix) Receipts not specifically treated under this paragraph are located in a subzone, improvement subzone or expansion subzone if the greatest portion of the income-producing activities are performed in the subzone, improvement subzone or expansion subzone, based on costs of performance.(3) The deposits factor is a fraction, the numerator of which is the average value of deposits located in a subzone, improvement subzone or expansion subzone during the taxable year and the denominator of which is the average value of the total deposits in this Commonwealth during the taxable year. The average value of deposits is to be computed on a quarterly basis. Deposits are located in the subzone, improvement subzone or expansion subzone if the institution maintains a qualified business that properly treats the deposits as a liability on its books or records. A deposit is considered to be properly treated as a liability on the books or records of a qualified business if:(i) the deposit account was opened or transferred to the qualified business by or at the direction of the depositor, regardless of where subsequent deposits or withdrawals are made;(ii) the employees regularly connected with the qualified business are primarily responsible for servicing the depositor's general banking and other financial needs; and(iii) at least one of the following factors occurs at the qualified business: (A) The deposit was solicited by an employee regularly connected with the qualified business, regardless of where the deposit was actually solicited.(B) The terms governing the deposit were negotiated by employees regularly connected with the qualified business, regardless of where the negotiations were actually conducted.(C) The essential records relating to the deposit are physically located at the qualified business and the deposit is serviced at the qualified business.(d) Limitation on amount of credit.--The credit allowed under this section shall not exceed 50% of the tax liability of the taxpayer under Article VII or XV of the Tax Reform Code of 1971 for the tax year.1998, Oct. 6, P.L. 705, No. 92, § 517, added 2000, Dec. 20, P.L. 841, No. 119, § 5, imd. effective. Amended 2002, Dec. 9, P.L. 1727, No. 217, § 6, imd. effective.