Are YOU Prepared for the New Local Income Tax System?

by Tim Caskey 18. July 2011 10:16
You may have heard about the Pennsylvania State legislature’s plan to restructure and streamline the local earned income tax (EIT) collection system. Act 32, which was passed in 2008, provides for the local EIT to be collected by each county rather than 560 different localities. Each county other than Philadelphia and Allegheny will have one tax collector. Allegheny County, encompassing Pittsburgh and surrounding municipalities, will have four tax collection districts. Philadelphia City/County will continue using its own consolidated tax system. Beginning January 1, 2012, employers will need to follow the new withholding rules and remit local income taxes withheld from employee paychecks to their designated tax collector. Here are the basics of compliance: 1. Each of your employees will fill out the form located at http://www.newpa.com/webfm_send/1738 This form certifies the employee’s address and your place of business, using uniform codes for each municipality. 2. Employers are required to withhold local income tax at a rate which is the higher of: a. The resident EIT rate for the municipality where the employee resides; or b. The non-resident EIT rate for the municipality where the employee is employed. 3. Employers with multiple locations in Pennsylvania may remit all withholding amounts to the county tax collection district where they are headquartered. If you choose this option, you will be required to remit electronically on a monthly basis. 4. For more information, there is an informative FAQ link and other information at http://www.newpa.com/get-local-gov-support/tax-information/dceds-act-32-eit-collection-system
Categories: Tax