Pennsylvania HB 2305: An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in sales and use tax, further providing for exclusions from tax.

Bill Text

PRIOR PRINTER'S NO. 3036 PRINTER'S NO. 3202
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2305
Session of
2026
INTRODUCED BY WAXMAN, SAMUELSON, HARKINS, HILL-EVANS,
SHUSTERMAN, BURGOS, FREEMAN, INGLIS, PASHINSKI, SANCHEZ AND
D. WILLIAMS, MARCH 20, 2026
AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,
AS AMENDED, APRIL 15, 2026
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in sales and use tax, further providing for
exclusions from tax.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 204(10) of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971, is amended
to read:
Section 204. Exclusions from Tax.--The tax imposed by
section 202 shall not be imposed upon any of the following:
* * *
(10) The sale at retail to or use by (i) any charitable
organization, volunteer firemen's organization, volunteer
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firefighters' relief association as defined in 35 Pa.C.S. § 7412
(relating to definitions) or nonprofit educational institution,
or (ii) a religious organization for religious purposes of
tangible personal property or services other than pursuant to a
construction contract: Provided, however, That [the]:
(A) The exclusion of this clause shall not apply with
respect to any tangible personal property or services used in
any unrelated trade or business carried on by such organization
or institution or with respect to any materials, supplies and
equipment used and transferred to such organization or
institution in the construction, reconstruction, remodeling,
renovation, repairs and maintenance of any real estate
structure, other than building machinery and equipment, except
materials and supplies when purchased by such organizations or
institutions for routine maintenance and repairs.
(B) If the department has issued sales tax-exempt status to
a volunteer firefighters' organization or a volunteer
firefighters' relief association, the sales tax-exempt status
may not expire unless the activities of the organization or
association change so that the organization or association does
not qualify as an institution of purely public charity in which
case the organization or association shall immediately notify
the department of the change. If the department ascertains that
an organization or association no longer qualifies as an
institution of purely public charity, the department may revoke
the sales tax-exempt status of the organization or association.
(C) The department may issue conditional tax-exempt status
as a charitable organization to an organization, association or
institution described in this clause for two years if the
organization, association or institution meets the following:
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(I) is qualified under section 501(c)(3) or (4) of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
501(c)(3) and (4)) as evidenced by a determination letter from
the Internal Revenue Service;
(II) satisfies section 5(c) of the act of November 26, 1997
(P.L.508, No.55), known as the Institutions of Purely Public
Charity Act; and
(III) has a three-year business plan that meets section
5(b), (d), (e) and (f) of the Institutions of Purely Public
Charity Act.
(D) The department may issue an assessment under section 230
if the department determines that the conditional tax-exempt
status under subclause (C) was improperly issued or if the
organization, association or institution fails to meet section
5(b), (c), (d), (e) and (f) of the Institutions of Purely Public
Charity Act within two years of receiving conditional tax-exempt
status.
* * *
Section 2. This act shall take effect in 60 days. JANUARY 1,
2027, OR IN 90 DAYS, WHICHEVER IS LATER.
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