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3. Compliance

All “qualified businesses” and “persons” must be in full compliance with all state and local tax laws,

and building and housing code provisions, in order to be entitled to claim any exemptions, deductions,

abatements or credits offered in the Act. The Department of Revenue reserves the right to conduct an

audit examination of any taxpayer to ensure full compliance with the Act.

4. Penalty for violation of the Act

Any person claiming KOZ tax benefits to which the person was not entitled under the Act, shall be

liable for the tax benefits received and subject to the applicable interest, in addition to civil and

criminal penalty provisions provided in the Act.

5. Repayment of Benefits

Any qualified business located within a KOZ and receiving exemptions, deductions, abatements or

credits under the Act, which subsequently relocates outside of the Zone within the first five years of

locating in a zone, may be required to refund the benefits the business received to state and local

authorities according to the provisions in the Act.

Any qualified business that is required to meet the relocation provisions set forth in paragraph D.2.

above and fails to meet those requirements will be subject to the revocation of future benefits and the

repayment of benefits previously received.

6. Deadlines

The deadline to file a KOZ application is December 31st of the year for which benefits are to be

received.

The deadline to come into compliance with deficiencies for code violations is December 31st of the

year for which benefits are to be received.

The deadline to come into compliance with tax issues is February 5th of the year following the year

for which benefits are to be received.

7. Definitions

a. Capital Investment: (i) an undertaking to construct, repair, renovate, improve, equip, furnish, or

acquire any building, structure, facility, or physical betterment or improvement; (ii) land; or (iii)

furnishing, machinery, apparatus of equipment for building, structure, facility or physical

betterment or improvement, the term includes soft costs related to the project.

b. Soft Costs: include items directly related to the completion of the project, e.g. professional

services/consultants, architectural fees, engineering fees, inspection fees, insurance, environmental

assessment, legal fees, closing costs and contingencies. Soft costs may not exceed 10% of the

capital investment.

c. Full-Time Employment: for the purpose of determining the relocation compliance will coincide

with the definition of full-time, permanent employment of the specific industry sector within which

the company operates.

d. Business Expansion: An existing Pennsylvania business whose operations, equipment and

employees remain at their present location when the business expands into a KOZ. If any part of

the existing business operations, equipment or employees are relocated into the KOZ, the

Department will deem such action as a relocation.

Keystone Opportunity Zone - Program Guidelines And Application - Pennsylvania Department Of Community And Economic Development Page 6