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.

PRINTER'S NO.   3036

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 2305
                                               Session of
                                                 2026

     INTRODUCED BY WAXMAN, SAMUELSON, HARKINS, HILL-EVANS,
        SHUSTERMAN, BURGOS, FREEMAN AND INGLIS, MARCH 20, 2026

     REFERRED TO COMMITTEE ON FINANCE, MARCH 20, 2026


                                    AN ACT
 1   Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
 2      act relating to tax reform and State taxation by codifying
 3      and enumerating certain subjects of taxation and imposing
 4      taxes thereon; providing procedures for the payment,
 5      collection, administration and enforcement thereof; providing
 6      for tax credits in certain cases; conferring powers and
 7      imposing duties upon the Department of Revenue, certain
 8      employers, fiduciaries, individuals, persons, corporations
 9      and other entities; prescribing crimes, offenses and
10      penalties," in sales and use tax, further providing for
11      exclusions from tax.
12      The General Assembly of the Commonwealth of Pennsylvania
13   hereby enacts as follows:
14      Section 1.    Section 204(10) of the act of March 4, 1971
15   (P.L.6, No.2), known as the Tax Reform Code of 1971, is amended
16   to read:
17      Section 204.    Exclusions from Tax.--The tax imposed by
18   section 202 shall not be imposed upon any of the following:
19      * * *
20      (10)    The sale at retail to or use by (i) any charitable
21   organization, volunteer firemen's organization, volunteer
22   firefighters' relief association as defined in 35 Pa.C.S. § 7412
 1   (relating to definitions) or nonprofit educational institution,
 2   or (ii) a religious organization for religious purposes of
 3   tangible personal property or services other than pursuant to a
 4   construction contract: Provided, however, That [the]:
 5      (A)   The exclusion of this clause shall not apply with
 6   respect to any tangible personal property or services used in
 7   any unrelated trade or business carried on by such organization
 8   or institution or with respect to any materials, supplies and
 9   equipment used and transferred to such organization or
10   institution in the construction, reconstruction, remodeling,
11   renovation, repairs and maintenance of any real estate
12   structure, other than building machinery and equipment, except
13   materials and supplies when purchased by such organizations or
14   institutions for routine maintenance and repairs.
15      (B)   If the department has issued sales tax-exempt status to
16   a volunteer firefighters' organization or a volunteer
17   firefighters' relief association, the sales tax-exempt status
18   may not expire unless the activities of the organization or
19   association change so that the organization or association does
20   not qualify as an institution of purely public charity in which
21   case the organization or association shall immediately notify
22   the department of the change. If the department ascertains that
23   an organization or association no longer qualifies as an
24   institution of purely public charity, the department may revoke
25   the sales tax-exempt status of the organization or association.
26      (C)   The department may issue conditional tax-exempt status
27   as a charitable organization to an organization, association or
28   institution described in this clause for two years if the
29   organization, association or institution meets the following:
30      (I)   is qualified under section 501(c)(3) or (4) of the

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 1   Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
 2   501(c)(3) and (4)) as evidenced by a determination letter from
 3   the Internal Revenue Service;
 4      (II)    satisfies section 5(c) of the act of November 26, 1997
 5   (P.L.508, No.55), known as the Institutions of Purely Public
 6   Charity Act; and
 7      (III)   has a three-year business plan that meets section
 8   5(b), (d), (e) and (f) of the Institutions of Purely Public
 9   Charity Act.
10      (D)    The department may issue an assessment under section 230
11   if the department determines that the conditional tax-exempt
12   status under subclause (C) was improperly issued or if the
13   organization, association or institution fails to meet section
14   5(b), (c), (d), (e) and (f) of the Institutions of Purely Public
15   Charity Act within two years of receiving conditional tax-exempt
16   status.
17      * * *
18      Section 2.   This act shall take effect in 60 days.




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