Does your company have employees in Pennsylvania? Regardless of where you’re headquartered, under Act 32, all companies doing business in Pennsylvania are now responsible for collecting Earned Income Taxes (EIT) for all employees on behalf of a new county-wide tax agency. Furthermore, these local income taxes along with taxpayer information must be forwarded to the county-wide tax collector utilizing new standardized forms and a prescribed schedule.
This represents a fundamental change in your obligation as an employer in terms of local Earned Income Tax collection. The changes were effective January 1, 2011, but will become mandatory on January 1, 2012. While each municipality and school district will determine the income tax rate, collection of the EIT will be done by a single county-wide tax collector.
Highlights of Act 32
- Act 32 pertains to all municipalities and school districts except Philadelphia
- Some counties enacted it in January 2011 – it must be implemented by all companies with locations in PA by January 2012
- It is a law that streamlines and standardizes the local EIT system
- Reduces the number of local earned income tax collectors from approximately 560 to 21
- The appointment of collection responsibility falls on countywide committees made up of representatives from local municipalities and school districts
- The committees established tax collection districts and elected tax officers to collect the EIT
- Act 32 requires uniform withholding of earned income taxes and remittance to a single local collector or Tax Officer
- Under Act 32, employers are required to withhold the higher of the employee’s resident earned income tax amount (rate of total resident EIT where they reside) vs. the employee’s municipal non-resident earned income tax amount (rate of non-resident EIT where they are employed) and remit to the workplace tax collector
To learn more, please register for our free webinar: Pennsylvania Act 32 – Collecting Local Earned Income Taxes in Pennsylvania or click here for more information. Don’t miss out on what you need to know so that your company’s payroll department is in compliance with the many mandated changes!