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STATE COLLEGE BOROUGH TAX OFFICE
243 South Allen Street
State College, PA 16801-4864
Appointed Local Services Tax Collector for the Borough of State College, College Township, Ferguson Township, Harris Township,
Patton Township and the State College Area School District
Phone: (814) 234-7120 - FAX: (814) 234-7148 – Forms/Information: www.statecollegepa.us
January 2009
Local Services Tax
Information for Employers and Self Employed Individuals
(Municipalities and School District are Independent Political Subdivisions of the Commonwealth of Pennsylvania)
TABLE OF CONTENTS
Topic Page
Tax Levy 3
Collection / Remittance of the Tax 3-4
Exceptions to Withholding Requirement 4-5
Multiple Employers / Concurrent Employment 4
Employee Statement to Secondary Employers Appendix (Exhibit 1)
Exemptions
Military based exemption 4
Income based exemption 4
Clergy exemption 4
Annual Exemption Request Form Appendix (Exhibit 2)
Employer Duties Related to Exemption Forms 4
Employee Duties Related to Exemption Forms 4
Withholding Procedures 5-6
Employee is Exempt from Muni LST 5
Employee is Not Exempt from School or Muni LST 5
Loss of Exemption Status During Year 5-6
New Hires and Terminated Employees 6
Reporting 6
Withholding Requirements Work Flow Appendix (Exhibit 3)
Catch Up Withholding Rules Worksheet & Example Appendix (Exhibit 4)
New Hire Withholding Rules Worksheet & Example Appendix (Exhibit 5)
CUSTOMER SERVICE
General Information Phone: 1-814-234-7120
Internet www.statecollegepa.us
Forms www.statecollegepa.us
Commonwealth of Pennsylvania’s Department of
Community and Economic Development (DCED) www.newpa.com
2
LOCAL SERVICES TAX
The State College Borough Tax Office has been appointed by the individual governing bodies of the Borough
of State College, College Township, Ferguson Township, Harris Township, Patton Township, and the State
College Area School District as the Local Services Tax Collector (“Collector”). The borough and townships are
collectively referred to in this document as the “Municipalities”, individually as “Municipality”, and the State
College Area School District as the “School District”.
TAX LEVY
Each of the municipalities and the school district levy a Local Services Tax (LST) on every individual engaging
in an occupation, whether as an employee or self employed, within their respective jurisdictional limits.
Employees and self employed individuals are exempt from the Municipal LST if their total Earned Income
and/or Net Profits from all sources within the municipality is less than $12,000 for the calendar year. The
levies and income exemptions are as follows:
LOCAL SERVICES TAX LEVIES INCOME EXEMPTION
Municipal School Combined Municipal School
Borough $47 $5 $52 $12,000 Zero
College $47 $5 $52 $12,000 Zero
Ferguson $47 $5 $52 $12,000 Zero
Harris $47 $5 $52 $12,000 Zero
Patton $47 $5 $52 $12,000 Zero
COLLECTION / REMITTANCE OF THE TAX
Employers: Employers are charged with the responsibility of withholding a pro rata portion of the LST each
pay period from all of its employees. The collected tax is remitted to the collector no later than 30 days
following the final day of a calendar quarter using a form prescribed by the collector.
Sole proprietorships with NO employees: Typically, self employed individuals do not pay themselves wages.
Consequently, there are no wages from which to withhold the LST. Self employed individuals with no
employees are charged with the responsibility of remitting a pro rata portion of the LST to the collector no later
than 30 days following the final day of a calendar quarter using a form prescribed by the collector. The pro
rata share of the tax to be remitted each quarter is 25% of the LST you are subject to. SEE NOTE BELOW
REGARDING PARTNERSHIPS, S CORPORATIONS, LIMITED LIABLITY COMPANIES AND OTHER
ALLOWABLE METHODS OF ORGANIZING A BUSINESS.
Sole proprietorships with employees: You should follow the procedures as an employer for each individual
you employ and provide compensation from which the LST can be withheld. Personally, you are charged with
the responsibility of remitting a pro rata portion of the LST to the collector no later than 30 days following the
final day of a calendar quarter using a form prescribed by the collector. The pro rata share of the tax to be
remitted each quarter is 25% of the LST you are subject to. SEE NOTE BELOW REGARDING
PARTNERSHIPS, S CORPORATIONS, LIMITED LIABLITY COMPANIES AND OTHER ALLOWABLE
METHODS OF ORGANIZING A BUSINESS.
Partnerships, S Corporations, Limited Liability Companies, etc: You should follow the procedures as an
employer for each individual your business employs, if any, and provide compensation from which the LST
can be withheld. Personally, each partner, shareholder, etc performing services in one or more of the
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municipalities is charged with the responsibility of remitting a pro rata portion of the LST to the collector no
later than 30 days following the final day of a calendar quarter using a form prescribed by the collector. The
pro rata share of the tax to be remitted each quarter is 25% of the LST you are subject to.
Employers Located Outside the Municipality: Each employer located outside the municipality who engages in
business within the municipality is charged with the duty of collecting the LST from each of the employees
engaged by the employer and performing work for the employer within the municipality. Employees working
within the municipality for employers located outside the municipality whose employer fails to withhold and
remit the LST are liable for the LST.
EMPLOYERS
Employers, including sole proprietors, partnerships, S corporations, limited liability companies, and other
business forms who have employees working for them, are charged with the responsibility of withholding a pro
rata portion of the LST each pay period from all of its employees. There are a couple of exceptions to this
general rule:
EXCEPTIONS TO WITHHOLDING REQUIREMENT
Multiple Employers: Do not withhold the School District ($5.00) or Municipal ($47.00) LST if you have received
a properly executed Employee Statement to Secondary Employers (Exhibit 1) notifying you that either 1)
the LST has been withheld by another employer or 2) the LST is being withheld by another employer who is
the employee’s PRINCIPAL employer.
Individuals are not subject to the payment of the LST at more than one place of employment during a payroll
period.
Military Service Exemption: Do not withhold the School District ($5.00) or Municipal ($47.00) LST if you have
received a properly executed Annual Exemption Request Form (Exhibit 2) for which exemption is based on
military service.
Income Based Exemption: Do not withhold the Municipal ($47.00) LST if you have received a properly
executed Annual Exemption Request Form (Exhibit 2) indicating the employee expects to receive less than
$12,000 in total earned income and net profits from employment within the municipality. There is no income
based exemption from the School District LST. Consequently, employers are required to withhold the School
District LST ($5.00) even though the employee may have claimed an income based exemption from the
Municipal LST. Please note that the income based exemption is also available for sole proprietorships as well
as other self employed individuals.
Clergy Exemption: Do not withhold the School District ($5.00) or Municipal ($47.00) LST if you have received
a properly executed Annual Exemption Request Form (Exhibit 2) for which exemption is attributed to clergy
based employment.
EXEMPTION FORMS - DUTIES OF EMPLOYERS AND EMPLOYEES
Employer:
It is the employer’s duty to offer each of their employees an opportunity each year to claim exemption from
the LST. Employers should provide each of their employees with an Annual Exemption Request Form
prior to the first pay date of each calendar year. Employees hired during the year should be provided with a
form prior to their first pay date.
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Employee:
Employees seeking exemption from the LST must annually file an Annual Exemption Request Form with the
Employer and the Collector.
WITHHOLDING PROCEDURES
For an overview of the withholding procedures in the form of a flowchart, please refer to Exhibit 3.
As noted in the ordinances, failure of an Employer to deduct the LST does not relieve the employer from the
duty to file a return and pay the LST. If the employer fails to deduct the LST as required, or fails to pay the
LST to the collector, the employer is liable for the LST in full.
Because each employee may qualify for exemption in full (military or secondary employer) or in part (income
level) or not at all, care must be exercised in computing the amount to withhold each pay period from each
employee.
PARTIAL INCOME BASED EXEMPTION: Employee is Exempt from the Municipal ($47.00) but not the School
District ($5.00) LST
For each employee employed by you for any length of time during any payroll period during the calendar year,
you must withhold the School District LST ($5.00) in one lump sum from the first paycheck of the year.
NO EXEMPTION: Employee is Exempt from neither Municipal ($47.00) nor School District ($5.00) LST
For each employee employed by you for any length of time during any payroll period during the calendar year,
you must deduct a pro rata share of the combined LST ($52.00) from the earned income payable to the
employee with respect to such payroll period. The pro rata share to be deducted each pay period is
determined by dividing $52.00 by the number of regular pay periods established by you for the calendar year.
For example, if you pay your employees semi-monthly, the pro rata share of the LST be de deducted each
pay period is $2.16 determined by dividing $52.00 by 24. Round down the amount of tax deducted each
payroll period to the nearest one-hundredth of a dollar.
Employee’s MUNICIPAL LST Income Based Exemption Status Ceases during the Calendar Year
There are times when you will need to start the withholding of the Municipal LST during the year because the
employee’s exemption status has ceased for any of the following reasons:
1. You are the principal employer and have paid the employee earned income within the municipality an
amount equal to or in excess of $12,000 in that calendar year, or
2. You have received notification from either the employee or the Collector that the employee’s total
earned income and/or net profits within the municipality has equaled or exceeded $12,000 in that
calendar year, or
3. Your employee notifies you that your position as a secondary employer has been upgraded to
PRINCIPAL. Before beginning withholding, confirm with your employee the amount of LST withheld
by his/her former Principal employer.
For the first pay period following any of these events, withhold a lump sum equal to the amount of Municipal
LST that was not withheld from the employee due to the exemption claimed by the employee, plus the per pay
period pro rata share. The full pro rata share of the tax must be withheld each of the remaining pay periods in
the calendar year. Please see Exhibit 4 for further instructions and an example of this process.
See next page for example.
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Here’s an example based on the following facts: 1) Employee claims exemption from Municipal LST, 2)
Employer pays employees weekly (i.e. 52 pay periods), 3) Employee loses exemption status after 26 pay
periods have passed.
1. Payroll 1: $5.00 School District LST
2. Payrolls 2-26: $0.00
3. Payroll 27 (catch-up withholding): $23.40 ($47.00 municipal LST divided by 52 total pay periods times
26 pay periods passed) plus $0.90 ($47.00 municipal LST divided by 52 total pay periods).
4. Payrolls 28 to 52: $0.90 per week (The final LST deduction for the year will need to be adjusted for
the total amount withheld to equal $52.00.)
New Hires and Terminated Employees – Withholding Requirement
New Hires: You are only required to withhold the pro rata share of the Municipal and/or School District LST for
the pay periods, full or partial, an employee works for you. You should ask the employee to complete an
Employee Statement to Secondary Employers (Exhibit 1) if the LST was withheld by a previous employer.
Remember, the maximum LST payable by anyone is $52.00 regardless of how many municipalities the
employee has worked in. See Exhibit 5 for New Hire Withholding Procedures.
Terminated Employees: Again, you are only required to withhold the pro rata share of the Municipal and/or
School District LST for the pay periods, full or partial, an employee works for you. The employee is liable for
the balance of the tax either through direct payment to the Collector or via subsequent withholding by the next
employer. As a convenience to your terminating employee, you can voluntarily agree to withhold the
remaining balance of the LST due.
REPORTING
Our office will mail you (or your designee) a quarterly Local Services Tax Return at the end of March, June,
September and December. If you desire to substitute a facsimile or payroll report prepared internally, you
must receive written permission. The tax office is willing to accept spreadsheets and other generic forms
providing they contain all the information that is required on the prescribed form, including a signature, title,
and date. Please note that if your business employs 50 or more, you must file your Employers’ quarterly
withholding reports via an approved electronic filing method. Contact the tax office if additional electronic filing
information is needed.
Please note that failure to receive the quarterly form from our office does not relieve you of your reporting
responsibility. If you fail to receive a tax return, please contact the tax office. It should be noted that tax
returns that are incomplete, incorrectly filed, or missing information are not timely filed and are subject to
penalty and interest.
The quarterly report must be filed even if there is no tax due as long as you are still doing business in one or
more of the municipalities.
The quarterly reports and remittance of the LST due must be received in our office on or before the due dates
of April 30 (Jan/Feb/Mar), July 31 (Apr/May/June), October 31 (Jul/Aug/Sept), and January 31 (Oct/Nov/Dec).
If you mail your report and payment, it is determined to be filed late if the US postmark is dated after the due
date.
Make your check payable to State College Borough Tax Office and send the quarterly report and tax due to
the following address:
State College Borough Tax Office
243 South Allen Street; State College PA 16801-4864
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APPENDIX
Exhibit Description
1 Employee Statement to Secondary Employers
2 Annual Local Services Tax (LST) Exemption Request
3 Withholding Requirements - Local Services Tax Effective 01/01/2008
4 Local Services Tax (LST) - Catch-up Withholding Rules
5 Local Services Tax (LST) - New Hire Withholding Rules
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State College Borough Tax Office – 243 South Allen Street – State College, Pa 16801
Phone: (814) 234-7120 Fax: (814) 234-7148
Local Services Tax Collector for the Borough of State College and the Townships of College, Ferguson, Harris and Patton (Centre County, PA )
EMPLOYEE STATEMENT TO SECONDARY EMPLOYERS
LOCAL SERVICES TAX (LST) – EXHIBIT 1
This Statement is for Calendar Year ______________ Phone Number _______________________________
Email Address _____________________________________________________________________________
Employee Name _______________________________________ Soc Sec No __________________________
Home Address: Street ____________________________ City _________________ State ___ Zip Code _____
Local Address (if different): Street ____________________________ Phone ___________________________
City ____________________________ State _________ Zip Code __________
SPECIAL NOTE TO YOUR EMPLOYERS
You are required to refrain from withholding both the Municipal LST and School District LST from the
undersigned providing the appropriate documentation is provided.
NOTE TO EMPLOYEE
In the event you do not qualify for an exemption from the Municipal and / or School District Local Services Tax
(LST), there are 2 situations when your employer must refrain from withholding the tax:
1. You have paid the maximum amount of $52.00 for the current year. You must attach proof of payment.
The tax collector appointed by the municipality and / or school district is required to provide you with a
receipt of payment upon request.
2. You are concurrently employed in either the same or a different municipality and the principal employer
is withholding the LST. You must complete the employee statement below and present together with
supporting documentation to all your non-principal employers for them to be relieved of the
responsibility of withholding the tax.
EMPLOYEE STATEMENT TO NON-PRINCIPAL EMPLOYERS
The name, address, and phone number of my principal employer at the time I sign this form is as follows:
Employer Name: _________________________________
Street Address: _________________________________
City/Town: _________________________________ State / Zip: __________________________
Phone: _________________________________
Municipality: _________________________________
I have attached a recent pay statement from my principal employer showing the following:
1. Employer’s Name
2. Pay period – beginning and ending dates for that pay
3. Evidence the LST is being withheld
Should my principal employer change during this calendar year, I will notify all my current employers within 2
weeks of occurrence.
I DECLARE UNDER PENALTY OF LAW THAT THE INFORMATION HEREIN CONTAINED IS TRUE AND CORRECT.
______________________________________________ _____________________
Signature Date
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State College Borough Tax Office – 243 South Allen Street – State College, Pa 16801
Phone: (814) 234-7120 Fax: (814) 234-7148
Local Services Tax Collector for the Borough of State College and the Townships of College, Ferguson, Harris, and Patton ( Centre County, PA )
ANNUAL LOCAL SERVICES TAX (LST) EXEMPTION REQUEST
(Page 1 of 2)
This Statement is for Calendar Year ______________ Phone Number _______________________________
Email Address _____________________________________________________________________________
Employee Name _______________________________________ Soc Sec No __________________________
Home Address: Street ____________________________ City _________________ State ___ Zip Code _____
Local Address (if different): Street ____________________________ Phone ___________________________
City ____________________________ State _________ Zip Code __________
Employer Name____________________________________________________________________________
EXEMPTIONS BASED ON MILITARY SERVICE
If you are exempt for either of these two reasons, please check the appropriate box. You are not subject to the
LST levied by the municipality or school district.
Honorable discharge with a total disability. Please attach a copy of your discharge orders and a
statement from the US Veterans Administrator documenting your total disability.
Reservist called to active duty during this calendar year. Please attach a copy of your orders
directing you to active duty status. Annual training is not eligible for exemption.
RELIGIOUS CLERGY EXEMPTION
My sole occupation within the jurisdiction imposing the tax is performing services as a member
of the religious clergy.
UPFRONT EXEMPTION FROM MUNICIPAL LST ($47.00) BASED ON EXPECTED EARNED
INCOME AND NET PROFITS OF LESS THAN $12,000
You must complete the Earnings Exemption Documentation Worksheet and attach the required documents.
Important details regarding this statutory exemption:
1. The Local Services Tax (LST) is a levy where you work, not where you live.
2. There is no income based exemption from the LST levied by the State College Area School District. $5.00 must be
withheld even though you may qualify for an exemption from the Municipal LST.
3. IMPORTANT: To qualify for this exemption, you must have a prior year’s history of earnings less than $12,000 in
the Municipality for which you are requesting an exemption. You must include Form W-2 as proof. If your Form W-
2(s) is not available, the final pay stub for each employer can be substituted provided it shows the amount of year-to-
date earnings and employer’s name and address. Self employed individuals must provide a copy of the PA Schedule
C, F, or RK-1 for the prior year. If you have no prior year earnings history, you are not eligible for an exemption.
For the calendar year specified above, I expect to earn less than $12,000 during the calendar year in the
following municipalities. (Check all that apply.) ** REVERSE SIDE MUST BE COMPLETED **
1. Borough of State College: 2. College Township: 3. Ferguson Township
4. Harris Township: 5. Patton Township:
You must sign and provide this form and supporting documentation to your employer AND our office as the appointed Local
Services Tax Collector for the Borough of State College and the Townships of College, Ferguson, Harris, and Patton ( missing
documentation will delay the processing of your exemption form as well a failure to provide copies to both offices).
I DECLARE UNDER PENALTY OF LAW THAT THE INFORMATION HEREIN CONTAINED IS TRUE AND CORRECT.
______________________________________________ _____________________
Signature Date
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EARNINGS EXEMPTION DOCUMENTATION WORKSHEET (Page 2 of 2)
This schedule must be completed and included, together with the supporting documents, with the exemption request form.
Employee Name _______________________ Soc Sec No _______________ Tax Year __________
Documentation Required: Copies of your last pay stubs or W-2 forms showing that you were employed in the
municipality in the prior year and had total earnings less than $12,000.
School District: State College Area School District Income Exemption: $ NONE
Municipality: Borough of State College
Employer: _________________________________________
Actual Prior Year Earnings From Employers Located Here $__________
Actual Prior Year Earnings From Self-Employment Located Here $__________
Total Prior Year Municipal Income – All Sources $__________
Municipality: College Township
Employer: __________________________________________
Actual Prior Year Earnings From Employers Located Here $__________
Actual Prior Year Earnings From Self-Employment Located Here $__________
Total Prior Year Municipal Income – All Sources $__________
Municipality: Ferguson Township
Employer: __________________________________________
Actual Prior Year Earnings From Employers Located Here $__________
Actual Prior Year Earnings From Self-Employment Located Here $__________
Total Prior Year Municipal Income – All Sources $__________
Municipality: Harris Township
Employer: __________________________________________
Actual Prior Year Earnings From Employers Located Here $__________
Actual Prior Year Earnings From Self-Employment Located Here $__________
Total Prior Year Municipal Income – All Sources $__________
Municipality: Patton Township
Employer: __________________________________________
Actual Prior Year Earnings From Employers Located Here $__________
Actual Prior Year Earnings From Self-Employment Located Here $__________
Total Prior Year Municipal Income – All Sources $__________
IMPORTANT NOTE TO EMPLOYERS
The Municipalities are required by law to exempt from the LST employees whose earned income from all sources
(employers and self-employment) in their municipality is less than $12,000 because the levied rate exceeds $10.00.
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Townships of College, Ferguson, Harris, & Patton and State College Borough
Withholding Requirements - Local Services Tax Effective 01/01/2008
Total Tax Rate: $52.00 (Municipal Share = $47.00 - School District Share = $5.00)
Exemption Level: Municipality @ $12,000 per calendar year - School District @ $0 per calendar year
START
Employer determines if exemption certificate is on file
for the municipal share of tax
A1 A2
SCHOOL DISTRICT SHARE OF TAX SCHOOL DISTRICT SHARE OF TAX
No municipal exemption certificate on file, Municipal exemption certificate on file
Employer starts withholding on first pay of the year Employer withholds $5.00 in a lump sum
$5.00 divided by number of pays in calendar year from the first available paycheck
B C
MUNICIPAL SHARE OF TAX MUNICIPAL SHARE OF TAX
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No exemption certificate on file, Exemption certificate on file,
Employer starts withholding on first pay of the year Employer delays withholding $47.00 unless one
or more of the following conditions are met:
$47.00 divided by number of pays in calendar year
a. Earnings exceed $12,000
b. Tax office notifies employer concurrent earnings
Total Payroll Deduction = A1 + B in PSD exceed $12,000
c. Tax office notifies employer that no valid
exemption certificate is on file
d. Taxpayer notifies employer that exemption
certificate is no longer valid
* If one or more of the above conditions are met,
Catch-up withholding rules apply. *
NOTE: IF THE EMPLOYEE IS A NEW HIRE, First Payroll Deduction = A2
YOU MUST FOLLOW THE NEW HIRE RULES If one or more of the four conditions listed above are
met, you must follow the Catch-up withholding rules
EXHIBIT 3
Local Services Tax (LST)
Catch-up Withholding Rules
The catch-up withholding provision of the LST act only applies to individuals that have for the current calendar
year filed for a low-income or military exemption and are determined to be ineligible for the exemption. The
employer is required to bring the taxpayer’s withholding account up-to-date and equal to the total tax that
would have been withheld if no exemption certificate had initially been filed.
1. Employer calculates Net LST Due as follows:
Annual LST Due
Less year-to-date LST withheld
= Net LST Due
2. Employer withholds from next pay check issued:
(a) amount to catch-up __________________________________
To determine catch-up amount:
Net LST Due divided by number of pay periods per year = LST Due per pay period
LST Due per pay period times number of pay periods that have passed = catch-up amount
PLUS
(b) LST Due per pay period _____________________
EQUALS NEXT PAY CHECK DEDUCTION FOR LST _____________________
3. Employer withholds from remaining pay checks in year the LST Due per pay period
The amount of LST to be collected each payroll period should be rounded down to the nearest cent. The final
LST deduction for the year may need to be adjusted in order for the total amount withheld to equal the Net
LST Due. If number of pay periods are unknown (seasonal or temporary employee), deduct $1.00 for each
week or partial week worked.
Example:
Annual LST Due $ 52.00 26 total pay periods per year
Less year-to-date LST withheld 15.00 Employee’s paid to date (all employers)
= Net LST Due $ 37.00 6 pay periods have passed
Net LST Due of $37.00 divided by 26 pay periods per year = $1.42 LST Due per pay period
$1.42 LST Due per pay period times 6 pay periods that have passed = $8.52 catch-up amount
Catch-up amount $ 8.52
Plus LST Due per pay period 1.42 Pay period number 7
First pay check deduction for LST $ 9.94
19 remaining pay periods in year times $1.42 LST Due per pay period = $26.98
Final payment of LST for the year will have to be adjusted from $1.42 to $1.50 in order for the Net
LST Due for the year to equal $37.00 (First pay check deduction $9.94 plus $26.98 = $36.92. Since
this amount is less than NET LST Due, the additional $0.08 needs to be added to the final LST
deduction).
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EXHIBIT 4
Local Services Tax (LST)
New Hire Withholding Rules
1. Employer calculates Net LST Due as follows:
Annual LST Due
Less year-to date LST withheld
= Net LST Due
2. Employer calculates LST Due per pay period:
Net LST Due divided by number of pay periods per year * = LST Due per pay period
* regardless of employee’s hire date
3. Employer withholds from first pay check the LST Due per pay period
** Please note: Catch-up withholding rules do not apply.
4. Employer withholds from remaining pay checks in year the LST Due per pay period
Exception to this rule…
New hire with exemption certificate – use sections A2 and/or C from Flow Chart (EXHIBIT 3)
If number of pay periods are unknown (seasonal or temporary employee), deduct $1.00 for each week
or partial week worked.
The amount of LST to be collected each payroll period should be rounded down to the nearest cent.
Example: Annual LST Due $52.00 26 pay periods per year
Less year-to-date LST withheld 23.00 Hired April 1, 2008
= Net LST Due $29.00 6 pay periods have passed
Net LST Due of $29.00 divided by 26 pay periods per year = $1.12 LST Due per pay period
First pay check deduction for LST = $1.12
Remaining pay check deductions for LST = $1.12 per pay check
Total LST withheld from new employee = $22.40
EXHIBIT 5
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Notes:
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