Capital Tax Collection Bureau Why Consolidate Currently there are more than 550 earned income tax collectors in Pennsylvania more than all other states combined Act 32 consolidates local earned income tax collection to the county wide level ID: 386218
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Slide1
Act 32 Discussion
Capital
Tax Collection BureauSlide2
Why Consolidate?
Currently, there are more than 550 earned income tax collectors in Pennsylvania; more than all other states combined
Act 32 consolidates local earned income tax collection to the county wide level
One collector per Tax Collection District
Collector is selected by the Tax Collection Committee for each TCD
69 TCDs (none in Philadelphia, 4 in Allegheny County)
21 remaining collectorsSlide3
Standardization
Standardized forms created by the DCED
Standardized regulations created by the DCED
Standardized codes
6 digit codes (first two digits are county, second two are school district and third two are municipality)Slide4
New Requirements
Employers must register with the Act 32 tax collector within 15 days
Certificate of Residence (CoR): Every employer must obtain a CoR from every new employee or every time a current employee changes their domicile
Based on the 6 digit codes provided on the CoR, employers must determine the employee’s residence tax rate and the employer’s non-resident tax rate
Employers must withhold the
greater
of the employee’s resident tax rate or the non-resident tax rate of where they work as in the DCED tax registerSlide5
Withholding examples
Compare the two tax rates:
The employee’s resident tax rate
The non-resident tax rate where the employer is located
If the non-resident tax rate is higher than the resident tax rate, where the employee works is entitled to the difference (distressed cities)Slide6
Examples
1. Resident Rate is 0.5% and the non-resident rate of 1.0%: The employer withholds 1% and remits it to the county-wide collector. 0.5% is due to where the employee lives and 0.5% is due to where the employee worksSlide7
Examples
2. Resident rate is 1.125% and non-resident rate is 0%: Employer withholds 1.125% and remits it to the county-wide collector. It all gets paid to where the employee livesSlide8
Examples
3. Resident rate is 0%, non-resident rate is 1.0%: Employer withholds 1.0% and remits it to the county-wide collector. 1.0% is paid to where the employee works
General rule: Money first goes to where the employee livesSlide9
New Requirements
Employers must file and remit on a
quarterly
basis
Exception: If multiple worksites in Pennsylvania and if employer is headquartered in Pennsylvania, an employer can file detail and remit all withholdings for all locations to the county-wide collector for the county where their payroll operation is located
If headquartered outside PA or in Philadelphia, the employer can file all detail and remit all withholdings to any county-wide collector where they have a place of business
If you do this, you must file monthly and electronically
You must also provide 30 days notice to the county-wide collector for where you wish to file and they must agree to do it
Must also provide notice to collectors where you would normally fileSlide10
Reporting Requirements
Employee name
Employee SS#
Employee address (must be physical street address, no PO Box)
6 digit code of where employee lives
Employee’s wages for the quarter
Amount withheld for each employee for the quarterSlide11
Official Tax Register
Maintained by the DCED
Updated 1/1 and 7/1 of each year
http://munstatspa.dced.state.pa.us/
6 digit PSD codes:
http://www.newpa.com/get-local-gov-support/municipal-statistics
Example: Brady Township in Huntingdon County is 310101
Must use DCED to confirm tax ratesSlide12
Filing Options
Paper return
You can download from our website or we can mail a copy with information from previous quarter already completed
Electronically
You can file online (this is the easiest option for employers!)
CD (CSV format,
EFW2
extended)
Instructions for filing electronically are on our websiteSlide13
Act 32 Changes for Individual Taxpayers
Individuals may no longer use Net Losses from business as an offset against W-2 wages earned
Can offset loss from one business against net profits of another
Self employed or those employed outside of Pennsylvania are required to file and pay quarterly