Act 32 was enacted in 2008 with the objective of consolidating the collection of the local earned income tax (EIT) in Pennsylvania. Pennsylvania was streamlined from about 560 tax collectors into 69 Tax Collection Districts (TCD). Each TCD is controlled by a Tax Collection Committee (TCC). For years taxpayers and tax practitioners have been complaining about the inconsistency as to how the EIT was enforced by the tax collectors and local tax jurisdictions.
What does Act 32 mean for PA Employers?
Act 32 requires employers to withhold local taxes for all employees as of January 1, 2012. Employers who are non-compliant with Act 32 can face fines up to $2,500 for each offense. The employer may also be held responsible for the employee’s taxes if they fail to withhold the taxes from the employee. The penalties for non-compliance are significant and we would welcome the opportunity to review your current payroll and employee information to ensure that you are compliant with Act 32.
Act 32 states that at the end of each calendar quarter, each employer will be required to:
File a quarterly return with the designated tax collector and remit the amount of EIT deducted during the preceding calendar quarter.
For employers with employees located in several TCDs, the employer will remit the EIT to the tax officer of the TCD in which the employer’s payroll operations are housed & will be required to remit electronically on a monthly basis.
Employers are required to register with the appointed tax collector within 15 days of becoming an employer.
Each employer will require each employee to complete a certificate of residency form that identifies the political subdivision where the employee works and resides. If an employee moves during the year, the employee must file an updated certificate of residency. A copy of this form should be retained by the employer along with the employee’s completed W-4, I-9 forms, direct deposit authorization forms, etcc.
We would welcome the opportunity to review your payroll information and ensure that your company is compliant with Act 32. Complete the form below for a free consultation.