Payroll Tax Processors and those who handle payroll tax returns in Pennsylvania should be aware of changes in the way payroll taxes are submitted due to PA ACT 32.
What is PA Act 32?
PA Act 32 is a law that reforms and standardizes the local earned income tax system. 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 Earned Income Tax (EIT). PA Act 32 reduces Pennsylvania’s number of Earned Income Tax (EIT) collectors from 560 to a maximum of 69, one for each tax collection district. The actual number of collectors is anticipated to be about 21, as several collectors will service more than one county. PA Act 32 requires uniform withholding of earned income taxes and remittance to a single local collector or Tax Officer. The act applies to the earned income taxes levied and collected after December 31, 2011. Appointed tax officers started collecting the EIT on January 1, 2012 unless the tax collection district was approved for early implementation.
• PA Act 32 became effective statewide beginning 1/1/2012.
• Businesses with multiple locations across the state will be permitted to remit to the county tax collection district where they are headquartered rather than tens or even hundreds of collectors around the state, as is the case under current law. In exchange, the employers who exercise this option will be required to remit with-holdings and employee wage tax detail electronically on a monthly basis.
• Remittance standards will be determined between collectors and employers.
• Businesses must register themselves and their employees with local tax collectors.
• Third parties will work with collectors and businesses to remit taxes.
• Does this affect all PA locals or is it opt-in? No.
• Is electronic filing optional or mandated? Mandated.
• Is there a POA (Power of Attorney) required? No.
• How will third party processors pay, file & interact with the agency? All will remain the same for third party processors, just different Tax Collectors.
For more information on how PA ACT 32 may impact your business, contact your PTM Account Executive.