53 Pa. Stat. § 16116

Current through P.A. Acts 2024-18

Section 16116 - Allocation of business for city tax purposes

In case the entire business of any corporation is not transacted within the city, the tax or taxes authorized or imposed under this act shall be based upon that portion of the net income of a corporation for the tax year as may be determined by allocations and apportionments made as follows:

(1) Gains realized and losses sustained from the sale or exchange of capital assets, if those assets consist of real estate or tangible personal property situated in the city, shall be allocated to the city.

(2) Gains realized and losses sustained from the sale or exchange of capital assets, if those assets consist of real estate or tangible personal property situated outside of the city, shall not be allocated in any part to the city.

(3) The remaining net income shall be divided into three equal parts as follows:

(i) Of one part, a portion shall be attributed to business carried on within the city, as shall be found by multiplying that part by a fraction, whose numerator is the value of the corporation's tangible property situated within the city, and whose denominator is the value of all the corporation's tangible property wherever situated.

(ii) Of one part, a portion shall be attributed to business carried on within the city, as shall be found by multiplying that part by a fraction, whose numerator is the expenditures of the corporation for wages, salaries, commissions and other compensation to its employes, and assignable to the city, and whose denominator is the total expenditure of the corporation for wages, salaries, commissions, and other compensation to all its employes.

The amount assignable to the city of expenditures of the corporation for wages, salaries, commissions, or other compensation of its employes, shall be such expenditures for the taxable year as represents the wages, salaries, commissions, or other compensation of employes not chiefly situated at, connected with, or sent out from, premises for the transaction of business maintained by the corporation outside the city.

(iii) Of the remaining part, a portion shall be attributed to business carried on within the city, as shall be found by multiplying that part by a fraction, whose numerator is the amount of the taxpayer's gross receipts from sales of personal property delivered, rentals from real and personal property situated and services performed within the city and whose denominator is the amount of the taxpayer's gross receipts from all its sales of personal property, rentals of real and personal property and services performed.

In cases where only two of the foregoing three rules are applicable, the remainder of the net income of the corporation shall be divided into two equal parts instead of three, each of which shall be apportioned in accordance with one of the remaining two rules. If only one of the three rules is applicable, the part of the net income received from business carried on within the city shall be determined solely by that rule.

A rule shall not be deemed to be inapplicable merely because all the tangible property or the expenditures of a corporation for wages, salaries, commissions, or other compensation, or the gross receipts of the corporation are found to be situated, incurred or received without the city.

If the allocation and apportionment provisions of this section do not fairly represent the extent of the taxpayer's business activity in the city, the taxpayer may petition for, in respect to all or any part of the taxpayer's business activity, if reasonable: separate accounting; the exclusion of any one or more of the factors; the inclusion of one or more additional factors which will fairly represent the taxpayer's business activity in the city; or the employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer's income.

The ordinance authorizing or imposing a tax hereunder may create additional exclusions, allocations or exemptions and may provide for a reasonable limitation on the period within which actions to collect the tax may be instituted.

(4) Notwithstanding the provisions in subsections (1), (2), and (3) in the case the entire business of any corporation engaged in doing business as an insurance or surety company is not transacted within the city, the tax or taxes authorized or imposed under this act shall be based upon that portion of the net income of such corporation for the tax year as shall be attributed to business transacted within the city by multiplying such net income by a fraction, of which the numerator is the gross premiums received from business transacted within the city and of which the denominator is the amount of gross premiums received from all its business. "Gross premiums" shall mean the amount of dues, fees and premiums stated in the policy contracts and shall include gross premiums of every character and description received during the taxable year from all underwriting activities whether said premiums were received in money or in the form of notes, credits or any other substitute for money, less the following deductions:

(i) All premiums returned on policies cancelled or not taken.

(ii) In the case of stock companies with participating features, an additional deduction for that portion of the premiums returned to the policyholders.

(iii) In the case of life insurance companies, an additional deduction for dividends declared and actually used by policyholders in payment of renewal premiums.

53 P.S. § 16116

1969, May 29, P.L. 47, § 6, imd. effective.