If your business is currently taking advantage of a Pennsylvania Keystone tax credit, you may be interested in reading a recent bulletin issued by the PA Department of Revenue. 

The Department of Revenue issued Corporation Tax Bulletin 2010-1 on August 25, 2010 to clarify the expiration of tax benefits for Keystone Opportunity Zones (KOZ)/Keystone Opportunity Expansion Zones (KOEZ)/Keystone Opportunity Improvement Zones (KOIZ) and the calculation of the corporation tax credits in the year the benefits expire.

Beginning in 2010, tax benefits for Keystone Opportunity Zones/Keystone Opportunity Expansion Zones/Keystone Opportunity Improvement Zones will begin to expire. The effective date for the expiration of these tax benefits will be December 31st of the year in which they expire.

Tax Year Ending on December 31st

According to the bulletin, a taxpayer with a tax year end of December 31st will be entitled to a credit for the entire year and there is no modification to the calculation of KOZ/KOEZ/KOIZ credit in the year the subzone or expansion subzone expires.

The numerator of the property factor will still be average property owned in the subzone or expansion subzone plus 8 times the rental expense in the subzone or expansion subzone for the entire year. The denominator of the property factor is the property located inside Pennsylvania for the year. The numerator of the payroll factor will be wages paid in the subzone or expansion subzone during the entire year with the denominator being the total wages paid in Pennsylvania for the year.
 
Tax Year Ending on a Date Other than December 31st
 
A taxpayer with a tax year ending on a date other than December 31st will be entitled to a credit based on its activity in the subzone or expansion subzone from the beginning of their tax year to December 31st.
 
In calculating the property factor, the numerator is the daily average of property located in the subzone or expansion subzone from the beginning of the tax year to December 31st plus 8 times the rental expense in the subzone or expansion subzone for the same period. The denominator of the property factor is the property located inside Pennsylvania for the entire year. The numerator of the payroll factor will be the wages paid in the subzone or expansion subzone from the beginning of the tax year to December 31 with the denominator being the total wages paid in Pennsylvania for the year.

For more information on Pennsylvania's KOZ program, please check out their website. 

For more information on Corporation Tax Bulletin 2010-1, check out this link.