Pennsylvania Act 32 Update

Felicia A. Angle

The mandatory requirement of all employers who maintain a work site in PA to withhold earned income tax on behalf of all employees begins with the first payroll of 2012. Remember that the withholding is based on the greater of the resident Earned Income Tax (“EIT”) rate where the employee lives and the non-resident rate where they are employed.

In order to meet the Act 32 requirements employers should:

1. Register their businesses with their tax collection district.
2. Fill out the Residency Certification Form. This form must be filled out by the employer and employee and signed by the employee. The employer retains this form for their records.
3. Send withheld taxes for all employees to the appropriate tax collector on a timely basis.
4. Complete and submit the Annual Withholding Reconciliation Form to the appropriate tax collector within 30 days of the close of each calendar year.

The Department of Community and Economic Development's web site (www.newpa.com) provides details on all requirements for employers and employees. If necessary, you can call 866-GO-NEWPA for additional assistance.

Working together and completing the necessary requirements will make the conversion process easier for all involved.

Additional information can be found by visiting KFMR’s Summer 2011 Financial Fitness.

To ensure compliance with requirements imposed by the IRS, please note, any advice contained in this publication was not intended, or written, to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. This publication is distributed with the understanding that the publisher and distributor are not providing legal, accounting or other professional advice and assume no liability whatsoever in conjunction with the information contained within this publication.