New Withholding Requirments
for Earned Income Tax – ACT 32 of 2008
What is Scott Township’s PSD Code? 730504
How it affects Scott Township Residents and Employers.
Act 32 of 2008 is a Pennsylvania law that was passed with the intention of simplifying the way local earned income tax is paid and collected throughout the state. The law will affect taxpayers, employers, municipalities, school districts, and tax collectors across Pennsylvania.
The most significant change of Act 32 is the consolidation of local earned income tax collectors. Act 32 requires all taxing jurisdictions within a specified geographical boundary to jointly select just one tax collector to serve the entire area. Each of the areas is called a “Tax Collection District” (TCD). Scott Township has been placed in the Southwest Allegheny County TCD, which includes all Allegheny County municipalities and school districts that are entirely located south and west of the Monongahela and Ohio rivers. That means Scott Township will share the same earned income tax collector as our neighbors in Upper St. Clair, Mt. Lebanon, Moon, Robinson, and Jefferson Hills to name a few.
Although Act 32 was passed in 2008, the major changes will not go into effect until the 2012 tax year. Therefore, all taxes attributable to 2011 earnings will still be collected under the current system (including the 2011 final returns that are due April 15, 2012).
HOW WILL THIS IMPACT TAXPAYERS?
First, the consolidation means that all Scott Township earned income tax will continue to be collected by a single tax collector. Jordan Tax Service has been appointed as the tax collector for the Southwest Allegheny County TCD. Therefore, both the municipal portion (0.50%) and the school district portion (0.50%) of Scott Township’s earned income tax will be collected by Jordan Tax Service.
Another significant change is that your employer should begin withholding the local earned income tax from your paycheck. Currently, many of you file and pay your local earned income tax on a quarterly basis because your employer does not withhold the tax from your paycheck (this is common throughout Pennsylvania). But under Act 32, all Pennsylvania employers will be required to withhold the tax. This will eliminate the need for most taxpayers to manually make a quarterly earned income tax payment. Taxpayers who are self-employed or work outside of Pennsylvania will continue making manual quarterly payments.
HOW WILL THIS IMPACT EMPLOYERS?
All employers will be required to withhold local income taxes for all of their employees, regardless of where the employees live. Employers will be responsible for identifying each employee’s residency and proper tax rate. Employers will have to provide that information to the tax collector quarterly along with the tax payments. Employers that have at least one location within the Southwest Allegheny County TCD must register with Jordan Tax Service.
HOW CAN I LEARN MORE?
Taxpayers and employers can learn more about Act 32 by visiting Jordan Tax Service’s special Act 32 website at: www.jordantax.com/act32. You can also call Jordan Tax Service 412-835-5243 or 724-731-2300. More information is also available through the PA Department of Community and Economic Development’s website at www.newpa.com (search for “Act 32”).