[HISTORY: Adopted by the Board of Supervisors of the Township of Kennett as indicated in article histories. Amendments noted where applicable.]
Article I Realty Transfer Tax
Article II Earned Income and Net Profits Tax
[Adopted 1-19-1987 by Ord. No. 55]
Pursuant to the authority contained in the Local Tax Enabling Act of December 31, 1965, P.L. 1257, a tax for the purpose of providing revenue for general township purposes is hereby levied, assessed and imposed upon the transfer of real property or an interest in real property within the limits of Kennett Township, regardless of where the instruments making the transfers are made, executed or delivered or where the actual settlements on the transfer take place, at the rate of 1% of the amount of the value of said real property or interest therein as herein defined.
Editor's Note: See 53 P.S. § 6901 et seq. and 53 P.S. § 6924.101 et seq.
This article shall be known and may be cited as the "Kennett Township Realty Transfer Tax Ordinance."
The following words, when used in this article, shall have the meanings ascribed to them in this section.
- ACQUIRED COMPANY
- Real estate company is an acquired company upon a change in the ownership interest in the company, however effected, if the change:
- A partnership, limited partnership or any other form of unincorporated enterprise, owned or conducted by two or more persons other than a private trust or decedent's estate.
- A corporation, joint-stock association, business trust or banking institution which is organized under the laws of the Commonwealth of Pennsylvania, the United States, or any other state, territory, foreign country or dependency.
- Any deed, instrument or writing which conveys, transfers, demises, vests, confirms or evidences any transfer or demise of title to real estate, but does not include wills, mortgages, deeds of trust or other instruments of like character given as security for a debt and deeds of release thereof to the debtor, land contracts whereby the legal title does not pass to the grantee until the total consideration specified in the contract has been paid or any cancellation thereof unless the consideration is payable over a period of time exceeding 30 years or instruments which solely grant, vest or confirm a public utility easement. A "document" shall also include a declaration of acquisition required to be presented for recording pursuant to § 211-6B hereof.
- FAMILY FARM CORPORATION
- A corporation of which at least 75% of its assets are devoted to the business of agriculture and at least 75% of each class of stock of the corporation is continuously owned by members of the same family. The business of agriculture shall not be deemed to include:
- A. Recreational activities such as, but not limited to, hunting, fishing, camping, skiing, show competition or racing.
- B. Raising, breeding or training of game animals, game birds, fish, cats, dogs or pets or animals intended for use in sporting or recreational activities.
- C. Fur farming.
- D. Stockyard and slaughterhouse operations.
- E. Manufacturing or processing operations of any kind.
- F. With respect to real estate acquired after February 16, 1986, a family farm corporation is an acquired company when, because of voluntary or involuntary dissolution, it ceases to be a family farm corporation or when, because of issuance or transfer of stock or because of acquisition or transfer of assets that are devoted to the business or agriculture, it fails to meet the minimum requirements of a family farm corporation under this article.
- MEMBERS OF THE SAME FAMILY
- Any individual, such individual's brothers and sisters, the brothers and sisters of such individual's parents and grandparents, the ancestors and lineal decedents of any of the foregoing, a spouse of any of the foregoing and the estate of any of the foregoing. Individuals related by the half blood or legal adoption shall be treated as if they were related by the whole blood.
- Every natural person, association or corporation. Whenever used in any clause prescribing and imposing a fine or imprisonment, or both, the term "person" as applied to associations shall include the responsible members or general partners thereof and, as applied to corporations, the officers thereof.
- A. Any lands, tenements or hereditaments within the Commonwealth of Pennsylvania, including, without limitation, buildings, structures, fixtures, mines, minerals, oil, gas, quarries, spaces with or without upper or lower boundaries, trees and other improvements, immovables or interests which by custom, usage or law pass with a conveyance of land, but excluding permanently attached machinery and equipment in an industrial plant.
- B. A condominium unit.
- C. A tenant-stockholder's interest in a cooperative housing corporation, trust or association under a proprietary lease or occupancy agreement.
- D. Real property.
- REAL ESTATE COMPANY
- A corporation or association which is primarily engaged in the business of holding, selling or leasing real estate, 90% or more of the ownership interest in which is held by 35 or fewer persons and which:
- A. Derives 60% or more of its annual gross receipts from the ownership or disposition of real estate; or
- B. Holds real estate, the value of which comprises 90% or more of the value of its entire tangible asset holdings exclusive of tangible assets which are freely transferable and actively traded on an established market.
- A. Any interest in real estate which endures for a period of time, the termination of which is not fixed or ascertained by a specific number of years, including, without limitation, an estate in fee simple, life estate or perpetual leasehold.
- B. Any interest in real estate enduring for a fixed period of years but which, either by reason of the length of the term or the grant of a right to extend the term by renewal or otherwise, consists of a group of rights approximating those of an estate in fee simple, life estate or perpetual leasehold, including, without limitation, a leasehold interest or possessory interest under a lease or occupancy agreement for a term of 30 years or more or a leasehold interest or possessory interest in real estate in which the lessee has equity; provided, however, in determining the term of a lease, it shall be presumed that a right or option to renew or extend a lease will be exercised if the rental charge to the lessee is fixed or if a method for calculating the rental charge is established.
- The making, executing, delivering, accepting or presenting for recording of a document.
- A. In the case of any bona fide sale of real estate at arm's length for actual monetary worth, the amount of the actual consideration therefor, paid or to be paid, including liens or other encumbrances thereon existing before the transfer and not removed thereby, whether or not the underlying indebtedness is assumed, and ground rents or a commensurate part thereof where such liens or other encumbrances and ground rents also encumber or are charged against other real estate, provided that, where such documents shall set forth a nominal consideration, the value thereof shall be determined from the price set forth in or actual consideration for the contract of sale;
- B. In the case of a gift, sale by execution upon a judgment or upon the foreclosure of a mortgage by a judicial officer, transactions without consideration or for consideration less than the actual monetary worth of the real estate, a taxable lease, an occupancy agreement, a leasehold or possessory interest, any exchange of properties, or the real estate of an acquired company, the actual monetary worth of the real estate determined by adjusting the assessed value of the real estate for local real estate tax purposes for the common level ratio of assessed values to market values of the taxing district as established by the State Tax Equalization Board, or a commensurate part of the assessment where the assessment includes other real estate;
- D. The actual consideration for or actual monetary worth of any executory agreement for the construction of buildings, structures or other permanent improvements to real estate between the grantor and other persons existing before the transfer and not removed thereby or between the grantor, the agent or principal of the grantor or a related corporation, association or partnership and the grantee existing before or effective with the transfer.
Every person who makes, executes, delivers, accepts or presents for recording any document or in whose behalf any document is made, executed, delivered, accepted or presented for recording shall be subject to pay for and in respect to the transaction or any part thereof, or for and in respect to the vellum parchment or paper upon which such document is written or printed, a tax payable to Kennett Township, Chester County, Pennsylvania, at the rate of 1% of the value of the real estate represented by such document, which tax shall be payable at the earlier of the time the document is presented for recording or within 30 days of acceptance of such document or within 30 days of becoming an acquired company.
The United States, the Commonwealth of Pennsylvania or any of their instrumentalities, agencies or political subdivisions shall be exempt from payment of the tax imposed by this article. The exemption of such governmental bodies shall not, however, relieve any other party to a transaction from liability for the tax.
The tax imposed by this article shall not be imposed upon the following transactions:
A transfer to the commonwealth or to any of its instrumentalities, agencies or political subdivisions by gift, dedication or deed in lieu of condemnation or deed of confirmation in connection with condemnation proceedings or a reconveyance by the condemning body of the property condemned to the owner of record at the time of condemnation, which reconveyance may include property line adjustments, provided said reconveyance is made within one year from the date of condemnation.
A document which the commonwealth is prohibited from taxing under the Constitution or statutes of the United States.
A conveyance to a municipality, township, school district or county pursuant to acquisition by the municipality, township, school district or county of a tax-delinquent property at sheriff sale or tax claim bureau sale.
A transfer for no or nominal actual consideration which corrects or confirms a transfer previously recorded but which does not extend or limit existing record legal title or interest.
A transfer of division in kind for no or nominal actual consideration of property passed by testate or intestate succession and held by cotenants; however, if any of the parties takes shares greater in value than their undivided interest, tax is due on the excess.
A transfer between husband and wife, between persons who were previously husband and wife who have since been divorced, provided the property or interest therein subject to such transfer was acquired by the husband and wife or husband or wife prior to the granting of the final decree in divorce, between parent and child or the spouse of such child, between brother or sister or spouse of a brother or sister and between a grandparent and grandchild or the spouse of such grandchild, except that a subsequent transfer by the grantee within one year shall be subject to a tax as if the grantor were making such transfer.
A transfer for no or nominal actual consideration of property passing by testate or intestate succession from a personal representative of a decedent to the decedent's devisee or heir.
A transfer for no or nominal actual consideration to a trustee of an ordinary trust where the transfer of the same property would be exempt if the transfer was made directly from the grantor to all of the possible beneficiaries, whether or not such beneficiaries are contingent or specifically named. No such exemption shall be granted unless the Recorder of Deeds is presented with a copy of the trust instrument that clearly identifies the grantor and all possible beneficiaries.
A transfer for no or nominal actual consideration from a trustee to a beneficiary of an ordinary trust.
A transfer for no or nominal actual consideration from trustee to successor trustee.
A transfer for no or nominal actual consideration between principal and agent or straw party or from or to an agent or straw party where, if the agent or straw party were his principal, no tax would be imposed under this article. Where the document by which title is acquired by a grantee or statement of value fails to set forth that the property was acquired by the grantee from or for the benefit of his principal there is a rebuttable presumption that the property is the property of the grantee in his individual capacity if the grantee claims an exemption from taxation under this clause.
A transfer made pursuant to the statutory merger or consolidation of a corporation or statutory division of a nonprofit corporation, except where the Department reasonably determines that the primary intent for such merger, consolidation or division is avoidance of the tax imposed by this article.
A transfer from a corporation or association of real estate held of record in the name of the corporation or association where the grantee owns stock or the corporation or an interest in the association in the same proportion as his interest in or ownership of the real estate being conveyed and where the stock of the corporation or the interest in the association has been held by the grantee for more than two years
A transfer from a nonprofit industrial development agency or authority to a grantee or property conveyed by the grantee to that agency or authority as security for a debt of the grantee or a transfer to a nonprofit industrial development agency or authority.
A transfer from a nonprofit industrial development agency or authority to a grantee purchasing directly from it, but only if:
The grantee shall directly use such real estate for the primary purpose of manufacturing, fabricating, compounding, processing, publishing, research and development, transportation, energy conversion, energy production, pollution control, warehousing or agriculture; and
The agency or authority has the full ownership interest in the real estate transferred.
A transfer by a mortgagor to the holder of a bona fide mortgage in default in lieu of a foreclosure or a transfer pursuant to a judicial sale in which the successful bidder is the bona fide holder of a mortgage, unless the holder assigns the bid to another person.
Any transfer between religious organizations or other bodies or persons holding title for a religious organization if such real estate is not being or has not been used by such transferor for commercial purposes.
A transfer to a conservancy which possesses a tax-exempt status pursuant to Section 501(c) of the Internal Revenue Code of 1954 [68A Stat. 3, 26 U.S.C. § 501(c)(3)] and which has as its primary purpose preservation of land for historic, recreational, scenic, agricultural or open space opportunities.
A transfer of real estate devoted to the business of agriculture to a family farm corporation by a member of the same family which directly owns at least 75% of each class of the stock thereof.
A transfer between members of the same family of an ownership interest in a real estate company or family farm corporation.
A transaction wherein the tax due is $1 or less.
Leases for the production or extraction of coal, oil, natural gas or minerals and assignments thereof. In order to exercise any exclusion provided in this section, the true, full and complete value of the transfer shall be shown on the statement of value. For leases of coal, oil, natural gas or minerals, the statement of value may be limited to an explanation of the reason such document is not subject to tax under this article.
Except as excluded in § 211-5 hereof, documents which make, confirm or evidence any transfer or demise of title to real estate between associations or corporations and the members, partners, shareholders or stockholders thereof are fully taxable. For the purposes of this article, corporations and associations are entities separate from their members, partners, stockholders or shareholders.
Within 30 days after becoming an acquired company, the company shall present for recording a declaration of acquisition with the Recorder of Deeds of Chester County for the purpose of noting thereon or the affixation thereto of such documentary stamps or other evidence of the payment of this tax as required by law. Such declaration shall set forth the value of the real estate holdings of the acquired company in Chester County.
Where there is a transfer of a residential property by a licensed real estate broker which property was transferred to him within the preceding year as consideration for the purchase of other residential property, a credit for the amount of the tax paid at the time of the transfer to him shall be given to him toward the amount of the tax upon the transfer.
Where there is a transfer by a builder of residential property which was transferred to the builder within the preceding year as consideration for the purchase of new previously unoccupied residential property, a credit for the amount of the tax paid at the time of the transfer to the builder shall be given to the builder toward the amount of the tax due upon the transfer.
Where there is a transfer of real estate which is demised by the grantor, a credit for the amount of the tax paid at the time of the demise shall be given the grantor toward the tax due upon the transfer.
Where there is a conveyance by deed of real estate which was previously sold under a land contract by the grantor, a credit for the amount of tax paid at the time of the sale shall be given the grantor toward the tax due upon the deed.
If the tax due upon the transfer is greater than the credit given under this section, the difference shall be paid. If the credit allowed is greater than the amount of tax due, no refund or carry-over credit shall be allowed.
The tax herein imposed shall be fully paid and have priority out of the proceeds of any judicial sale of real estate before any other obligation, claim, lien, judgment, estate or cost of the sale and of the writ upon which the sale is made, and the Sheriff or other officer conducting such sale shall pay the tax herein imposed out of the first monies paid to him in connection therewith. If the proceeds of the sale are insufficient to pay the entire tax herein imposed, the purchaser shall be liable for the remaining tax.
Where real estate or an interest in real estate lying partly within the boundaries of Kennett Township and partly without said boundaries is transferred, the tax herein imposed shall be calculated upon such portion of the value as shall be represented by the portion of the real estate or interest therein lying within the boundaries of the Township as determined by the realty transfer tax statement of value filed with the Recorder of Deeds or, if no such filing is required, by affidavit of the transferor or as separately stated in the document of transfer; provided, however, such value shall in no event be less than the highest assessed valuation for local tax purposes placed upon the real estate or the interest in the real estate in the assessment of the property within the Township.
Every document lodged with or presented to the Recorder of Deeds of Chester County for recording shall set forth therein and as a part of such document the true, full and complete value thereof. When the full, complete and actual consideration for the transfer which is subject to the tax is not set forth in the document, the person liable for the tax shall, contemporaneously with the filing of the document, file with the Recorder of Deeds a realty transfer tax statement of value identical to that promulgated by the Department of Revenue of the Commonwealth of Pennsylvania or, in the instance of an acquired company, a realty transfer tax declaration of acquisition identical to that promulgated by the Department of Revenue of the Commonwealth of Pennsylvania. The provisions of this section shall not apply to any excludable real estate transfers which are exempt from taxation based on family relationship.
The tax imposed hereby, including any amount payable to the Township based on a redetermination of the amount of tax due by the Commonwealth of Pennsylvania pursuant to § 211-13 hereof, shall be collected by the Recorder of Deeds of Chester County who shall act as agent for the Township in the collection of the transfer tax, as provided in 16 P.S. § 11011-6, as amended. The tax thus collected shall be payable by the Recorder to the Treasurer of Kennett Township at least monthly or at such other intervals as the Township and the Recorder of Deeds shall mutually determine.
The payment of the tax imposed by this article when received by the Recorder of Deeds shall be evidenced by the affixing of a documentary stamp or stamps or other evidence of payment as approved by the Pennsylvania Department of Revenue.
In the event a determination or redetermination of transfer tax due is made by the Pennsylvania Department of Revenue pursuant to Section 1111-C of Act 1986-77, 72 P.S. § 8111-C, such determination or redetermination shall be deemed to have been also made by the Secretary of Kennett Township, and there shall be due and owing to the Township as additional transfer tax the amount determined or redetermined by the Department to be due the Commonwealth of Pennsylvania.
Upon a redetermination of the amount of realty transfer tax due by the Commonwealth of Pennsylvania, the Recorder shall rerecord the document only when the transfer tax imposed by this article has been paid.
The Secretary of Kennett Township is hereby charged with the enforcement of the provisions of this article and is hereby authorized and empowered to prescribe, adopt and enforce rules and regulations relating to the registration and notation of transactions, the collection of transfer taxes, interest and penalties due hereunder, the prosecution of violations hereunder and any other matter pertaining to the administration and enforcement of the provisions of this article; provided, however, the regulations which have been promulgated by the Pennsylvania Department of Revenue under 72 P.S. § 8101-C et seq., as the same are from time to time amended, are incorporated into and made a part of this article and shall be deemed to have been adopted by the Township Secretary.
[Amended 4-21-2008 by Ord. No. 170]
The tax imposed under § 211-1 and all applicable interest and penalties shall be administered, collected and enforced under the Act of December 31, 1965 (P.L. 1257, No. 511), as amended, known as "The Local Tax Enabling Act," provided that, if the correct amount of the tax is not paid by the last date prescribed for timely payment, the Township, pursuant to Section 1102-D of the Tax Reform Code of 1971 (72 P.S. § 8102-D), authorizes and directs the Department of Revenue of the Commonwealth of Pennsylvania to determine, collect and enforce the tax, interest and penalties.
Editor's Note: See 53 P.S. § 6901 et seq. and 53 P.S. § 6924.101 et seq.
Any tax imposed under § 211-1 that is not paid by the date the tax is due shall bear interest as prescribed for interest on delinquent municipal claims under the Act of May 16, 1923 (P.L. 207, No. 153) (53 P.S. § 7101 et seq.), as amended, known as "The Municipal Claims and Tax Liens Act." The interest rate shall be the lesser of the interest rate imposed upon delinquent commonwealth taxes as provided in Section 806 of the Act of April 9, 1929 (P.L. 343, No. 176) (72 P.S. § 806), as amended, known as "The Fiscal Code," or the maximum interest rate permitted under the Municipal Claims and Tax Liens Act for tax claims.
It shall be unlawful for any person to:
Accept or present for recording or cause to be accepted or presented for recording any document without the full amount of the tax thereon being duly paid; or
Fail, neglect or refuse or comply with or violate the provisions of this article or the rules and regulations prescribed, adopted and promulgated by the Secretary under the provisions of this article.
Any person who violates any of the provisions of this section shall be guilty of a summary offense and shall be liable, upon conviction thereof, to a fine not exceeding $300 together with the cost of prosecution and, in default of payment of such fine and cost, shall be liable to a term of imprisonment in the County Jail for a period not to exceed 30 days.
[Adopted 11-15-2010 by Ord. No. 193]
All terms defined in the Local Tax Enabling Act, 53 P.S. § 6924.101 et seq., shall have the meanings set forth therein. The following terms shall have the meanings set forth herein:
- The person or entity appointed as tax officer pursuant to the Local Tax Enabling Act to collect the tax.
- EFFECTIVE DATE
- January 1, 2011.
- This article.
- GOVERNING BODY
- The Board of Supervisors of Kennett Township.
- LOCAL TAX ENABLING ACT
- The Local Tax Enabling Act, 53 P.S. § 6924.101 et seq., and as amended in the future.
- The tax imposed by this enactment.
- TAX RETURN
- A form prescribed by the collector for reporting the amount of tax or other amount owed or required to be withheld, remitted, or reported under this article or the Local Tax Enabling Act.
- TAX YEAR
- The period from January 1 to December 31.
- TAXING AUTHORITY
- Kennett Township.
- The tax collection committee established to govern and oversee the collection of earned income tax within the TCD under the Local Tax Enabling Act.
- Any tax collection district to which the taxing authority or any part of the taxing authority is assigned under the Local Tax Enabling Act.
Editor's Note: See 53 P.S. § 6901 et seq. and 53 P.S. § 6924.101 et seq.
General purpose resident tax. The taxing authority hereby imposes a tax for general revenue purposes at the rate of 1% on earned income and net profits of individual residents of the taxing authority.
General purpose municipal nonresident tax. The taxing authority also imposes a tax for general revenue purposes at the rate of 1% on earned income and net profits derived by an individual who is not a resident of the taxing authority from any work, business, profession or activity of any kind engaged in within the boundaries of the taxing authority. To facilitate the collection of the general purpose municipal nonresident tax imposed by this article, the taxing authority shall be authorized to require nonresident contractors and subcontractors who are subject to this tax to sign and file with the taxing authority a certificate of registration setting forth all information reasonably required to identify the nonresidents who are or will be engaged in work, business, profession or other activity for which the tax is payable. The form of the certificate of registration shall be made available in the office of the taxing authority. The cost of registration shall be as established by resolution of the taxing authority. The filing of the certificate of registration shall be a condition precedent to the issuance by the Township of any building permit or other permit necessary to authorize the work for which the tax is or will be due.
[Amended 5-20-2013 by Ord. No. 209]
Open space municipal resident tax. In addition to the tax levied for general revenue purposes, the taxing authority hereby imposes a tax for expenses related to open space lands under 32 P.S. § 5007.1 at the rate of 0.25% on earned income and net profits of individual residents of the taxing authority. This tax for open space lands was previously authorized by voter referendum.
Ongoing tax. The tax shall continue at the above rates during the current tax year and each tax year thereafter, without annual reenactment, until this article is repealed or the rate is changed.
Combined tax rate applicable to residents. Currently, the total rate applicable to residents of the taxing authority, including the tax imposed by the school district and municipality in which the individual resides, is 1.25%.
Local Tax Enabling Act applicable. The tax is imposed under authority of the Local Tax Enabling Act, and all provisions thereof that relate to a tax on earned income or net profits are incorporated into this article. Any future amendments to the Local Tax Enabling Act that are required to be applied to a tax on earned income or net profits will automatically become part of this article upon the effective date of such amendment, without the need for formal amendment of this article, to the maximum extent allowed by 1 Pa.C.S.A. § 1937.
Applicable laws, regulations, policies and procedures. The tax shall be collected and administered in accordance with: a) all applicable laws and regulations; and b) policies and procedures adopted by the TCC or by the collector. This includes any regulations, policies and procedures adopted in the future to the maximum extent allowed by 1 Pa.C.S.A. § 1937.
Although credits and deductions against tax are permitted under certain circumstances as provided in applicable law and regulations, no individuals are exempt from tax based on age, income or other factors.
Every individual receiving earned income or earning net profits in any tax year shall file tax returns and pay tax in accordance with the Local Tax Enabling Act.
Every employer shall register, withhold and remit tax, and file tax returns in accordance with the Local Tax Enabling Act.
The tax will be collected from individuals and employers by the collector.
Individuals and employers are subject to interest, penalties, costs and fines in accordance with the Local Tax Enabling Act, including costs imposed by the collector in accordance with authorization by the TCC having jurisdiction.
The primary purpose of this enactment is to conform the earned income and net profits tax currently imposed to the Local Tax Enabling Act, as amended and restated by Act 32 of 2008, and to do so within the time frame required by Act 32. Any prior enactment or part of any prior enactment conflicting with the provisions of this article is rescinded insofar as the conflict exists. To the extent the same as any enactment in force immediately prior to adoption of this article, the provisions of this article are intended as a continuation of such prior enactment and not as a new enactment. If this article is declared invalid, any prior enactment levying a similar tax shall remain in full force and effect and shall not be affected in any manner by adoption of this article. The provisions of this article shall not affect any act done or liability incurred, nor shall such provisions affect any suit or prosecution pending or to be initiated to enforce any right or penalty or to punish offense under the authority of any enactment in force prior to adoption of this article. Subject to the foregoing provisions of this section, this article shall supersede and repeal on the effective date any enactment levying a tax on earned income or net profits in force immediately prior to the effective date.