PA Act 32
Information for all Pennsylvania Employers (outside of Philadelphia).
Effective January 1, 2012, pursuant to PA Act 32, there will be a new filing and payment system for the remittance of Local Earned Income Tax (EIT) in Pennsylvania. Under the current system, each municipality and school district in PA was responsible for the collection and administration of its own earned income tax. Many municipalities hired outside tax collection services such as Berkheimer, Centax and Keystone Tax Bureau to name a few, to handle the administration of the EIT.
Effective January 1, 2012 this will all change. Please note Chester and Lebanon Counties chose to implement these changes effective January 1, 2011.
The following are the steps employers must take to be compliant with the new regulations:
Determine if you need to register with the tax collector in your region.
- If you are already registered with the designated tax collector in your region (per below), then you don't need to re-register.
- If you are not registered with the designated tax collector for your region but are currently withholding EIT then you should have, or will soon receive an application to register with the designated collector.
- If you are not currently withholding EIT then you will need to register with the appointed tax collector. At this point, we are not sure if you receive any notification from the designated tax collector.
- If you are using a 3rd party payroll service (such as Paychex) they should be aware of your new responsibilities. Please contact them for further information.
Designated Tax Collectors by County in Philadelphia Region
- Bucks and Chester – Keystone Tax Bureau
- Montgomery – Berkheimer
- Delaware – Centax
Residency Certification Form
All employers must have every employee complete a Residency Certification form. The employee must look up their 6 digit "PSD Code". The employer must retain the completed forms.
Determine the rate of withholding.
The rate the employer withholds will be the higher of the employer's rate or the employee's rate. You will need to update any software you use for processing payroll with the new rates, which, can be found at http://munstatspa.dced.state.pa.us/FindLocalTax.aspx
Employer to remit tax to their taxing authority quarterly.
- Employer must register, have all forms completed and determine the rate before December 31, 2011
- Even if employers business location has no Earned Income Tax, employer must withhold for employees and remit to taxing authority.
- The LST Tax (formerly OPT or EMST) is totally separate from the EIT regulations. Employer will withhold and remit this tax as in the past.
- If employer's business is located in Philadelphia exclusively, employer will not be subject to the new regulations. Provided employer has no locations outside Philadelphia, employer will still withhold the City resident and non-resident rates as in the past.
- If an employee moves, the employee must complete a new residency compliance form.
- If employer uses a third party payroll service, employer will still need to complete the forms for employees. Please call your payroll service to determine the steps they wish you to take.
- Beginning in 2012, if you are an employee and currently making estimated payments for your EIT, you may not need to continue making estimates for your earned income tax.
Posted: November 2011
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