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					                                                      Southeaster Pennsylvania Chapter
                                                        American Payroll Association
                                                        Frequently Asked Questions
                                                           PA Local Taxes - Act 32

  ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
  answers have been altered for any reason.


                      Questions                                    Berkheimer Answers                            Lancaster County Tax Collectors



                                                            Philadelphia/Pittsburgh


                                                     If the employee is considered to be employed
                                                     from the home base in Philadelphia they would
                                                     be subject to the city wage tax on all earnings,   For all residents of localities outside of
                                                     regardless of where they perform their duties.     Philadelphia, you should report and remit to a
                                                     If the locations they are traveling to are other   collector other than Philadelphia. You should
  An employee who has a “home base” in               offices of the employer, then it would be          discuss with your selected collector what work
  Philadelphia and rarely is at his home base, is    permissible to pro-rate the earnings earned        location to report. For example, a business
  a non resident of Philadelphia, and spends a       outside the city. If you were to do so, you        with payroll operations in Philadelphia but with
  majority of his time outside the city in various   would need to report those earnings to the tax     work location outside of Philadelphia may
  localities. What do employers do with these        collector for the area(s) in which each of those   select a collector as if they were an out of state
1 employees?                                         offices are located.                               employer for all non Philadelphia residents.


  Do you need a PSD code for an employee that        Yes, the fact that they are working in the city
  lives outside of Philadelphia, but works in        does not affect the need to show their resident    Yes. The employee should have a PSD code
2 Philadelphia and pays the city wage tax?           PSD code on the report when submitted.             for his/her place of residence.
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

  ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
  answers have been altered for any reason.


                      Questions                                     Berkheimer Answers                             Lancaster County Tax Collectors


                                                      Yes, an employer must list all employees that
                                                      work at the location being reported for,
                                                      regardless if wages and/or taxes are being
                                                      reported. If the employee is a resident of
                                                      Philadelphia you would show their home PSD
                                                      code as 510101. With no taxes shown as
                                                      being reported to the TCD you are filing with. If
  Would employers be required to report wages         the opposite is true, city non-resident, you
  to the TCD for the “other jurisdiction” (lived or   would show the employees home PSD code
  worked) for employees that we are currently         on the report and their work PSD as 510101. In      Yes, the employer should report the employee
3 withholding the Philadelphia City wage tax?         this case no taxes would be shown as well.          information and wages.


                                                      As an resident of the City of Pittsburgh, the
                                                      employee would be subject to the same rules         The tax withheld for that employee would be
                                                      as the other 68 TCD‟s in the commonwealth.          the resident tax rate for Pittsburgh since that is
  If an employee‟s home address is Pittsburgh,        The employer would withhold the taxes due           their residence location. A non-resident tax for
  but they work in a different township, say Ross     based on the higher of the 2 rates in place. In     their work location would not be withheld
  TWP and their school district is North Hills, is    this case it would be the city‟s 3% resident        except in the case where tthe non-resident tax
  that employee exempt from paying the 1%             rate, since it is greater than the non-resident     rate is higher than the Pittsburgh resident tax
4 Pittsburgh and 2% PSD Tax?                          rate for North Hills                                rate.

  If an employee lives in Philadelphia and works
  in, for example, West Chester PA, we                Yes, you are still required to show the             Check with the collector for your TCD. If
  understand we must withhold and report for          employee on the report to be submitted to           LCTCB is your collector, we request that you
  that employee as a Philadelphia resident, to        Chester County‟s Tax Collector. You would           list this employee with all information including
  Philadelphia. Are we also required to report        show the employees PSD as being                     addresses and PSD codes and that you
5 wages to West Chester?                              Philadelphia‟s.                                     include the wages only.
                                                        Southeaster Pennsylvania Chapter
                                                          American Payroll Association
                                                          Frequently Asked Questions
                                                             PA Local Taxes - Act 32

  ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
  answers have been altered for any reason.


                      Questions                                      Berkheimer Answers                            Lancaster County Tax Collectors



                                                       The collectors for the four (4) Allegheny TCD‟s
                                                       (which includes the city) are subject to the Act   No collectors including Pittsburgh are exempt
  Are the 4 Allegheny County Collectors all            32 reciprocation requirements to the extent        from having tax paid to other collectors. Only
  exempt from having tax paid to other collectors      that they receive monies for residents who live    the City of Philadelphia is not included in Act
6 or just the collectors for the City of Pittsburgh?   outside any of these TCD‟s.                        32.
                                                           Southeaster Pennsylvania Chapter
                                                             American Payroll Association
                                                             Frequently Asked Questions
                                                                PA Local Taxes - Act 32

       ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
       answers have been altered for any reason.


                          Questions                                       Berkheimer Answers                                Lancaster County Tax Collectors


                                                                 Multiple Work Locations:


                                                                                                                   First, it is important to remember that the
                                                                                                                   resident tax rate will many times be the higher
                                                                                                                   rate. As a general rule, the work location PSD
                                                                                                                   code should be the one for the base work
       What do you do with different employees that                                                                location for that employee. For example, a
       work a various locations throughout the week                                                                construction worker may go to different work
       and maybe in several locations in the same                                                                  sites but is considered based at one company
     7 day?                                                                                                        location.

                                                                                                                   The employer should contact the collector to
       Examples:                                                                                                   whom they are reporting and remitting.
       Substitute teacher reporting to different                                                                   For daily – district office.                 For
7a     schools on different days,                                                                                  long term sub - specific school location
       Fire and safety instructors that work at various                                                            Assumes different firehouse each day – home
7b     firehouses to train others,                                                                                 base.
       Contractors that work on various job sites in                                                               Employee home base from which he/she
                                                          In each of these scenarios the employee would
7c     the same day/week,                                                                                          receives assignments.
                                                          be considered to be employed from the
       Security guards working for several client                                                                  If employee travels to multiple locations during
                                                          location from which they receive their orders
7d     locations,                                                                                                  day, base work assignment location.
                                                          from. The tax rate to be charged would be
       Home nurses visiting patients throughout the                                                                Home base/office from which employee
                                                          based on that location and all taxes withheld
7e     day, temp/floater workers.                                                                                  receives assignments.
                                                          remitted to that TCD‟s collector. (This is
       In other words, employee does not necessarily      statement is subject to change based on the final
                                                                                                                   Assumes employee works for a temp agency.
       having a „home base‟ and never report to one       definitions to be provided by the DCED as part of the    Use temp agency location from which
7f     particular location.                               Rules and Regulations that they are finishing up now.)   employee receives assignments.
                                                      Southeaster Pennsylvania Chapter
                                                        American Payroll Association
                                                        Frequently Asked Questions
                                                           PA Local Taxes - Act 32

  ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
  answers have been altered for any reason.


                     Questions                                      Berkheimer Answers                              Lancaster County Tax Collectors


                                                     This is the “Wal-Mart” rule. If an business has
                                                     offices throughout the commonwealth, they are
                                                     permitted to file all of their taxes through a
                                                     single collector in the state. If their office is in
  From the DCED FAQ page – „Businesses with          PA then it must be with the collector in which
  multiple locations across the state will be        that office is located. If they are outside the
  permitted to remit to the county tax collection    state, then they have the right to choose which
  district where they are headquartered rather       collector they would do so with. If they choose
  than tens or even hundreds of collectors           to do so, they are required to than file
  around the state‟ – does “headquartered”           electronically and monthly with the collector of
  mean where the payroll office is located?          choice. The chosen collector must also be in           See Attachment A -§ 125.15. Elective Filing
  Some companies have various locations, but         agreement that they are willing to accept the          And Remittance By Multi-Work Location
8 one central payroll office. Please define.         monthly filings to be submitted.                       Employers.
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                      Questions                                      Berkheimer Answers                             Lancaster County Tax Collectors


                                                                    Miscellaneous:

                                                      I believe the resident address for use in this
                                                      scenario would be the place of employment, or
   What do you do with homeless                       if the individual has completed a W-4 form the
   employees?(Example: A staffing agency that         address listed on such. The employee will
   hires worker‟s for daily projects. These           need to declare a place of residence when            We suggest that these employees have the
   workers are usually living in various homeless     completing the required Certification of             non-resident tax withheld based on their home
 9 shelters with no real address.)                    Residency.                                           base (probably the staffing agency location).

                                                                                                           No. It will be the collector‟s responsibility to
   Are the employers required to withhold                                                                  collect additional tax, if required, from the
   retroactive taxes for employees that move and                                                           employee based on the annual tax return filed
10 do not report their change of address timely?                          Yes.                             by that employee.

                                                                                                           Yes. Act 32 applies only to EIT (earned
   Currently LST tax is split between the township                                                         income tax). You should check with the new
   and the school districts. Will the collection                                                           EIT appointed collector since that collector
   process remain the same for LST tax meaning        Yes, ACT 32 had no effect on how the LST will        may also have been appointed by the
   the employers are still responsible to collect     be collected. It is possible you will be reporting   municipality and/or school district to collect
11 and file LST to the correct township?              EIT to one collector and the LST to another.         their LST.
                                                         Southeaster Pennsylvania Chapter
                                                           American Payroll Association
                                                           Frequently Asked Questions
                                                              PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                       Questions                                       Berkheimer Answers                                Lancaster County Tax Collectors


   From the DCED FAQ list – “If a school district
   crosses a county line, the school district and its   This issue has been taken care of with the
   component municipalities have been kept              PSD codes promulgated by the DCED. They
   whole and are included in the county where the       determined early on which TCD these types of
   affected municipalities have the greatest            districts and their municipalities they would be        The DCED PSD Code list has already taken
   population.” How will the employee or the            assigned to. The employee simply needs to               this into consideration and has assigned the
   employer‟s know which county has the                 know the township and school district they              appropriate PSD code. The employer does
12 greatest population?                                 reside in. The coding handles the rest.                 not need to make this determination.


                                                        You will then need to depend on the employee
                                                        to know where they live, and go by the                  Our experience with the DCED website is that
                                                        municipality that they have shown on their              usually the first PSD code listed is correct.
   What do we do if the website states that an          Certificate of Residency. If you get it wrong,          However, it will be the collector‟s final
   address is located in two different                  the tax collector will notify you of such and you       responsibility to determine the correct PSD
13 municipalities?                                      will have the ability to correct it the next quarter.   code.

   If filing monthly, does the company also have                                                                No. But they will need to file the year-end
14 to file a quarterly return?                                                 No                               reconciliation.


                                                        Filing Instructions, Yes. Websites, no. Each
   Will the websites and filing instructions be         site is developed by that collector with no             No. Each collector will have their own
15 uniform for all collectors?                          oversight by the state.                                 websites and filing instructions.
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                      Questions                                     Berkheimer Answers                            Lancaster County Tax Collectors
                                                      You are required to verify that the information    The employer is required to report accurate
                                                      in use to determine the employee‟s tax rate is     information regarding the employee‟s
   What is the employer‟s responsibility in           correct. If you fail to do so, you can be held     residence address and PSD code and work
   regards to collecting information from the         responsible for any taxes not paid by the          location PSD code and to withhold at the
16 employees?                                         employee.                                          correct rate.


                                                                                                         The employer should take appropriate steps to
                                                                                                         secure accurate information. The employer is
                                                                                                         required to report accurate information
                                                                                                         regarding the employee‟s residence address
                                                                                                         and PSD code and work location PSD code
   What if the employee produces incorrect            As long as you can document that you withheld      and to withhold at the correct rate. Data
   information on purpose or fails to notify          based upon what was provided you are               reported and withholding at the correct rate
17 employer of change in address?                     protected by the law.                              should be to the best ability of the employer.

                                                      No, there are no penalties prescribed within
   Are the penalties on the employer or the           ACT 32 for an employee providing false
18 employee for incorrect information?                information.                                       There are no penalties for employees

                                                                                                         We would suggest that the employer use the
                                                                                                         best available information regarding an
                                                      Then the employer should note that in the          employee‟s address to determine the correct
   What if the employee refuses to complete the       employees file and withheld based upon the         PSD code and to withhold at the rate
19 form?                                              information shown on the employees W-4 form.       associated with that code.
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                       Questions                                     Berkheimer Answers                            Lancaster County Tax Collectors

   If an employee does not complete the                                                                   Yes, the employer is responsible for providing
   "Residency Certification Form" must the                                                                the correct PSD code for the employee‟s place
   employer still provide the PSD for employee's      Yes, it is your responsibility as an employer to    of residence and to withhold at the correct rate
20 home address?                                      obtain it.                                          for that PSD code.


   If the employee provides an incorrect
   municipality, are the employers responsible to
   modify the form or require the employee to         It would be in its best interest to attempt to do   The employer is responsible for reporting the
21 complete a new, accurate form?                     so.                                                 correct PSD code.


   Once employees complete the Certificate of                                                             Per Act 32, the employer is responsible for
   Residency Form, who is responsible for             The employer. The form is retained by the           reporting and withholding the correct PSD
   identifying the PSD code for that employee?        employer for their records and as proof in case     code and rate. The collector will be able to
22 The employee, employer, or tax collector?          of audit.                                           assist the employer.

                                                                                                          Many employers have elected to make the
                                                                                                          Certificate of Residency form available to their
                                                                                                          employee electronically. Please note that
                                                                                                          collectors may request a copy of the Certificate
   As long as correct information is collected for                                                        of Residency form from the employer.
   the Certificate of Residency Form, are             That is their choice, you simply need to have       Therefore, the employer should be able to
   employers required to use the paper form or        proof of how the information was gathered in        reproduce or transmit the form to the collector
23 can they have an electronic version?               case of audit.                                      is requested
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                       Questions                                     Berkheimer Answers                             Lancaster County Tax Collectors

   When the certificate of Residency is
   completed, Act 32 states it must be submitted      The 15 days is referring to when it is due to be     For LCTCB, the employer retains the
   within 15 days. Where are they to be sent?         back to the employer. The form is retained by        Certificate of Residency form. It does not need
24 Where the employee lives or works?                 the employer and not sent anywhere else.             to be sent to LCTCB.

                                                                                                           The employer. Collectors may request a copy
                                                                                                           of the Certificate of Residency form from the
25 Who is responsible for the record retention?       Employer                                             employer.



                                                      First and foremost, the Certificate of Residency
                                                      form should be retained as long as the
                                                      employee remains with the employer. The
                                                      Certificate is a tax record subject to audit by
                                                      the tax collector. The tax collector can typically
                                                      conduct an audit going back three (3) tax years
                                                      from the date a return/payment was due or the
                                                      date a return was filed, whichever is later. If no
                                                      return is filed, the collector can go back an
                                                      unlimited period of years to audit. Rule of          This is not defined in the Act. From my
                                                      thumb: retain the Certificate while the              experience as a school district business
                                                      employee remains employed; retain the                manager, there may be a possibility that during
   What is the record retention of the Certificate    Certificates for at least three years after the      a state audit of the district, a request to see
26 of Residency Form?                                 final quarter the employee is employed.              copies of the form may be part of the audit.

                                                                                                           This is collector specific. LCTCB will accept
   Can the certificate of residency forms be                                                               electronic uploads of the form if we request a
27 electronically sent/uploaded?                      They are not sent anywhere.                          copy.
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                      Questions                                     Berkheimer Answers                            Lancaster County Tax Collectors

   Is the entire social security number required on                                                      The confidentiality of the form rests with the
   the form or can the last 4 digits be used? Who                                                        employer. If LCTCB requests copies of the
   is responsible for the confidentiality of the      Employer choice. Employer is responsible to        form they may be uploaded through our secure
28 forms?                                             safeguard information provided.                    website.


   As of 2006 the State of PA passed a law that it
   is illegal to have social security numbers sent    They are not to be sent. Also ACT 66 does not      For LCTCB, forms may be sent through our
   through the mail. How are employers to send        pertain to documents that require that             secure website. The employer should check
29 forms to the tax authorities if required?          information for proper tax collection purposes.    with the collector to determine their options.

   Can we suggest the residency form to include
   some sort of perjury statement as seen on the
   Federal W4 form? “From the W4 - Under
   penalties of perjury, I declare that I have
   examined this certificate and to the best of my
   knowledge and belief, it is true, correct, and
30 complete.”                                         That suggestion needs to go to the DCED.           This would be the handled by DCED.

   What if an employee refuses to provide the         It is the employers responsibility to acquire a
   employer with a "physical" home address and        street address from the employee, if the           We ask that the employer provide as much
   will only provide a PO Box? How will the           employee refuses than the employer needs to        information as possible. LCTCB will then need
   employer report the PSD come for the               point out it is required to gather that            to do further research to determine the correct
31 employee's home address?                           information for the tax administrator.             PSD and notify the employer.
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                      Questions                                     Berkheimer Answers                            Lancaster County Tax Collectors


                                                                                                         LCTCB asks that employers make an effort to
                                                                                                         determine the correct PSD code and withhold
                                                                                                         at the correct rate. There will be no penalties
   Will employers be penalized for employees                                                             for incidental incorrect data. However, if it
   who – a) will not complete a Residency             They could be. Without that information the        appears that an employer has not made an
   Certification Form? Or b) do not provide a         return to be filed would not be considered filed   attempt to gather and provide this information,
32 physical home address?                             completely.                                        there may be penalties applied.
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                      Questions                                     Berkheimer Answers                            Lancaster County Tax Collectors


                                                             Early Adopter Counties:

                                                                                                         The employer should follow the regulations
                                                                                                         and guidelines of the collector to whom they
                                                                                                         are reporting and remitting. The reporting
                                                                                                         requirements are not employee specific but are
                                                                                                         employer specific for reporting and remitting.
                                                                                                         For example, an employer with a location in
                                                                                                         Lancaster County is required to report and
                                                                                                         remit to LCTCB for all of their employees.
   If an employee works in an early adopted                                                              Example, employer required to report to
   county but lives in another, what regulations                                                         LCTCB – this employee would be reported to
33 are to be followed?                                The rules in place for the place of employment.    LCTCB.

   What if the employee lives in an early adopter     The rules for withholding are based on place of    Example, employer would report as they do
34 county and works in another?                       employment, not residence.                         today.

                                                      This question needs to be posed to the
   Are employers in early adopter counties            collector for the area involved. I believe         Lancaster TCD does not require retroactive
   required to retroactively go back to January 1st   Chester County is doing so, but I cannot say       withholding. Other counties/collectors may
35 to report correct information?                     that for sure.                                     have different requirements.


   If employers are located in an early adopter                                                          Example, employer required to report to
   county but have employees that live in other       Place of residence has no bearing on the           LCTCB would report all of their employees
   counties, what set of regulations is the           withholding requirements. They are based on        even if those employees live in a non-early
36 employer required to follow?                       place of employment.                               adopter county.
                                                         Southeaster Pennsylvania Chapter
                                                           American Payroll Association
                                                           Frequently Asked Questions
                                                              PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                        Questions                                     Berkheimer Answers                          Lancaster County Tax Collectors
                                                                                                         Lancaster TCD – mandatory. However,
                                                                                                         Lancaster is waiving all penalties for 2011.
                                                                                                         Our goal is to assist employers during 2011 to
                                                                                                         obtain their employees Certificate of
                                                                                                         Residency, determine the correct PSD Codes,
                                                                                                         and work with their payrolls company or payroll
                                                                                                         software vendor to meet reporting formats and
                                                        They had the right to choose to do so. To do     requirements. This will allow the employers to
   Are early adopter counties mandatory or              so, the full county had to be in agreement and   be fully compliant with Act 32 beginning
37 voluntary?                                           be collected by one entity.                      January 1, 2012.

   What is the latest list for early adopter            Only 4 choose to go early. Chester, Lancaster,
38 counties?                                            Lebanon and Wyoming.                             Chester, Lebanon, Wyoming and Lancaster.


   Is it true that employees are liable for first and                                                    This is specific to each collector. It is true that
   second quarter taxes (employers can withhold                                                          employees will be responsible when they file
   and remit but are not required to) but the                                                            their 2011 returns for any under withholding for
   employer is required to withhold taxes                                                                2011. LCTCB is encouraging all employers to
   beginning 3rd quarter 2011? Do you have a                                                             begin withholding for al employees at the
39 link where it states this in writing?                See each county‟s collectors site.               correct rate as soon as possible in 2011.
                                                         Southeaster Pennsylvania Chapter
                                                           American Payroll Association
                                                           Frequently Asked Questions
                                                              PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                       Questions                                       Berkheimer Answers                               Lancaster County Tax Collectors


                                                                  Filing taxes withheld:


                                                                                                               Currently each collector has its own reporting
   Will there be on standard format for all                                                                    format and process. However, LCTCB, HAB &
   electronic files required to be uploaded or will                                                            Keystone formats are similar and are based on
40 each tax collector have their own formats?           No, no standard format is required.                    the EFW2 format as modified.


   Employers have the option of selecting a
   single tax collector to remit their withholding,
   however, employers with multiple work sites          An employer can choose a single collector for
   within PA, but many facilities have different        all of their sites, regardless if they all share the
   FEINs, are the employers still able to select a      same FEIN #. The employer would need show
   single tax collector or can they select a single     the employees resident and work PSD on the             Yes. The collector must accept your reports
41 tax collector based on FEIN? Please clarify.         reports filed.                                         and remittance.



                                                                                                               We assume the employer is reporting to
                                                                                                               different collectors because they have multiple
                                                                                                               work locations. The employer would report
                                                                                                               and file then for each work location to the
                                                                                                               collector for the TCD of that work location.
   If the „lived in‟ rate is the same as the „worked                                                           The resident rate or “lived in” rate takes priority
   in‟ rate, and the employer is not filing to one      All employer returns are to be filed with the          if it is the higher rate. For example, if the
   tax collector on a monthly basis but rather filing   administrator where the business is physically         employer reports to LCTCB for all employees
   to multiple tax collectors on a quarterly basis,     located. The employee‟s place of residence             then the tax withheld should be sent to LCTCB
42 which tax collector gets the tax withheld?           has no bearing whatsoever on this process.             regardless of where the employee lives.
                                                         Southeaster Pennsylvania Chapter
                                                           American Payroll Association
                                                           Frequently Asked Questions
                                                              PA Local Taxes - Act 32

     ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
     answers have been altered for any reason.


                        Questions                                     Berkheimer Answers                            Lancaster County Tax Collectors



                                                        By utilizing the PSD code for the employees
                                                        place of residence to determine the proper tax
                                                        rate to be withheld. That rate is than compared
    From the DCED FAQ page - How is an                  to the non-resident rate (if there is one in       http://munstatspa.dced.state.pa.us/FindLocalTa
    employer to determine the correct rate of           place) for the place of employment. The            x.aspx - Address lookup website.
    earned income tax to be withheld from an            employer than withholds at the greater of the 2            http://munstatspa.dced.state.pa.us –
 43 employee?                                           rates.                                             Tax Register lookup website

    Under Act 32, employers are required to
    withhold the higher of the employee‟s resident
    earned income tax amount (rate of total
    resident EIT where they reside) vs. the
    employee‟s municipal non-resident earned
    income tax amount (rate of non-resident EIT
 44 where they are employed).                           Correct. -see next page for example
                                                                                                           In this case the rate to be withheld is 1.0%.
    Example #1: If an individual resides in a                                                              0.5% will be distributed to the resident
    municipality/school district that impose a total                                                       municipality/school district and 0.5% will be
    resident EIT rate of 0.5% and they work in a                                                           distributed to the municipality where the
    municipality that imposes a municipal non-                                                             employee works. The taxpayer will be required
    resident EIT rate of 1.0%...a total EIT of 1.0%                                                        to file a tax return for both the resident and non-
44a would be withheld from the employee.                Correct.                                           resident TCD.
                                                          Southeaster Pennsylvania Chapter
                                                            American Payroll Association
                                                            Frequently Asked Questions
                                                               PA Local Taxes - Act 32

     ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
     answers have been altered for any reason.


                         Questions                                     Berkheimer Answers                            Lancaster County Tax Collectors
    Since the employee‟s lived in rate is lower,
    would the employee receive a tax refund when
    they file their local taxes? No the taxes
    withheld in excess of the resident rate are the
 45 property of the work location.                       Correct.                                           See above response.

    Example #2: If an individual resides in a
    municipality/school district that impose a total
    resident EIT rate of 1.6% and they work in a                                                            That is correct. In this case the resident
    municipality that imposes a municipal non-                                                              municipality/school district would receive the
    resident rate of 1.3%...a total EIT of 1.6%                                                             1.6% and the work location municipality will
45a would be withheld from the employee                  Correct.                                           receive no money.


    Are employers located in a township without a
    local still need to register to withhold and remit   Yes, all employers in the state will be required
    EIT on behalf of those employees who live in a       to register with the tax administrator for the     Yes. Employers are required to withhold and
 46 township with a local?                               county in which they are located.                  remit for all employees.

    If an employee lives in Philadelphia and works
    in, for example, West Chester PA, we
    understand we must withhold and report for
    that employee as a Philadelphia resident, to
    Philadelphia. Are we also required to report         Yes, this question was also answered in
 47 wages to West Chester?                               section 1.                                         Yes. This is recommended.
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                       Questions                                     Berkheimer Answers                             Lancaster County Tax Collectors

   If an employer is already registered for the EIT
   tax, will the employer be required to complete     Most tax collectors, who will be acquiring new
   a new Employer registration form once the          areas will require the employer to complete a        This will depend on the collector. LCTCB is
   form is available? Or will the tax collectors      registration form so that they can verify the        requesting a new registration on the
   obtain all necessary information regarding the     information received from the prior collector is     eReporting system. This registration is only
48 employer from the current tax collector?           correct.                                             necessary for use of the eReporting website.


   Our company is located in Scranton, Pa which
   has a high local tax 3.4% for residents. Most      The 3.4% in Scranton applies to Scranton             The rate for the employee‟s home address
   of our employees live in jurisdictions with a 1%   residents only. Their non-resident rate is 1%,       should be applied. Scranton‟s non-resident
   tax rate. When Act 32 begins what rate needs       so if the employee‟s resident rate is 1% or          rate is 1.0%. Withholding is the higher of the
   to be applied, the rate for their home address     greater you will withhold at the resident rate. If   resident (place of residence) or the non-
49 or the Scranton rate as they work in Scranton?     it is less than 1%, you will withhold at 1%.         resident rate (work location).
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                      Questions                                      Berkheimer Answers                            Lancaster County Tax Collectors


                                                               PSD Code questions:

                                                      The employer is required to report the PSD
                                                      code for the location of the Employer on the
   ADP (Payroll Company) is providing an option       employer account and provide the employee‟s
   to enter PA resident PSD however the LCTCB         PSd code for each employee reported for. I           Act 32 requires reporting of both the resident
   instructions are advising both the residency       believe the non-residency PSD code they are          and non-resident PSD code. Please see
   and non residency PSD must be reflected.           referring to is the PSD code for the employers       Attachment A – Why is the work location PSD
50 Which is correct?                                  place of business.                                   code important?


   From what we understand, the tax collectors
   want one PSD code and that is where the                                                                 Yes. But remember it is not the company PSD
   employee lives. The other code is the                                                                   code; it is the work location PSD code. The
   company PSD for their location. So you would                                                            only time it would be the „company‟ PSD code
   submit reports stating your company PSD            That is correct. You will show the employers         is if the business has only one location.
   code, but each individual employee would be        PSD code as part of the employer information         Otherwise, each business (work) location has
51 listed with their PSD code. Is this correct?       and the individuals PSD code part of their filing.   its own PSD code.

                                                                                                           Most collectors are recommending that Box 20
                                                                                                           on the W2 contain the 2 digit code for the TCD
   LCTCB advised that the TCD must be                                                                      where the employer remitted the withheld
   identified on the W2. The TCD does not have                                                             taxes. The 2 digits are the TCD code. For
   the authority to dictate what goes on the W2.      Actually Section 512 (7) (i, ii) mandates that       example, Lancaster TCD is 36. This will
   Is this a requirement? Or is this something the    this actually what is to be shown on the W-2.        provide the collector with the information
   employers are being requested to provide if        You need to report the # of the TCD to which         necessary to determine where the funds have
52 they are capable of doing so?                      the funds were remitted.                             been sent.
                                                         Southeaster Pennsylvania Chapter
                                                           American Payroll Association
                                                           Frequently Asked Questions
                                                              PA Local Taxes - Act 32

     ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
     answers have been altered for any reason.


                         Questions                                    Berkheimer Answers                            Lancaster County Tax Collectors


                                                                                                            For example, an employer reports and remits
                                                                                                            funds to LCTCB for all employees. One of the
                                                                                                            employees resides in Lebanon County, TCD
                                                                                                            38. Keystone is the collector for Lebanon
                                                                                                            County so when the taxpayer files their tax
                                                        No just the 2 digit TCD code which is the first 2   return with Keystone, Keystone can look at
                                                        numbers of the employers PSD code. If you           Box 20 that will contain the digits 36 and will
                                                        show the full 6 digit code for the employers        know that the tax withheld for that employee
52a Are they requesting all 6 digits?                   location that should not be a problem.              was sent to LCTCB.

    If the 6 digits code is not possible, what digits
52b are most important?                                 The first 2 of the PSD code.                        see above


    Employers are required to assign the LIVED in                                                           Yes. The work location PSD should be the
    PSD code for each employee and the WORK                                                                 actual work location address not the business
 53 location PSD code for the employer. Correct?        Correct                                             headquarters location.

                                                        You need to break down the wages paid by
                                                        PSD worked in and report the employee as
    What if there are multiple work locations for       working in each with the wages attributed to        You should discuss this with your selected
 54 the one employee?                                   that area.                                          collector.
                                                        Southeaster Pennsylvania Chapter
                                                          American Payroll Association
                                                          Frequently Asked Questions
                                                             PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                       Questions                                     Berkheimer Answers                           Lancaster County Tax Collectors

   When I looked at the official PSD code listing,
   several jurisdictions had two PSD codes
   because they had two school districts. For an       Correct. In cases such as these the employee
   employer does that mean they will have to           needs to choose the code that is for their        Yes. You should consult with your collector.
   figure out what school district their facility is   municipality that matches the SD their children   They will be able to assist you in determining
55 located in to use the proper code?                  do or would attend.                               the correct PSD code

                                                       The location of the payroll office or area to
   What happens if the facility is on the line and     which the employee reports for work each day,
   ends up partially in both school districts how do   is consider to be where they are employed
56 you decide which PSD code to use?                   from in situations such as these.                 Discuss with your collector.

                                                                                                         Act 32 and proposed DCED regulations
                                                                                                         indicate the Certificate of Residency is
                                                                                                         required for „new‟ employees. However,
                                                                                                         collectors in general believe it is important to
                                                                                                         have all employees complete a Certificate of
                                                                                                         Residency form. This is a useful tool for
   Are employers going to be required to obtain a      Act requires it from new employees only.          employers to get correct information to
   Certificate of Residency form from all current      Employers may wish to get it from all so that     determine the correct resident and work
   employees or just the new employees after           they can verify that they are withholding         location PSD codes and the correct
57 01/01/12?                                           correctly.                                        withholding rates.
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                       Questions                                    Berkheimer Answers                            Lancaster County Tax Collectors


                                                   Out of State employer with PA employees:


                                                      If the resident‟s company is located in PA and
                                                      that is where they are considered to be
                                                      employed from, then the employer would be
                                                      required to withhold the local rate, as well as
   If an employee lives in PA that has a local        any taxes due the place of employment in MD.
   resident rate and reports to work in MD are        If the PA resident is employed in MD, the MD       Generally yes. MD is a reciprocal state. The
   employers required to withhold the local PA        employer has no requirement to withhold the        employee would file a return in PA and would
   resident rate from the pay in addition to any      local tax. The PA resident would need to pay it    receive credit for the MD taxes paid. However,
58 MD local taxes?                                    on their own behalf quarterly.                     you should check with the local TCD collector.

   If an employee lives in PA that has a local
   resident rate and reports to work in NJ are        Same rules as above. If the place of               See Attachment A § 125.15. Elective Filing
   employers required to withhold the local PA        employment is in NJ there is not requirement       And Remittance By Multi-Work Location
59 resident rate?                                     for that employer to withhold the local tax.       Employers.

   Does the Act 32 affect the out of state                                                               See Attachment A § 125.15. Elective Filing
   employer withholding responsibility of work                                                           And Remittance By Multi-Work Location
60 from home employees that live in PA?               No it does not.                                    Employers.
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                      Questions                                     Berkheimer Answers                            Lancaster County Tax Collectors


                                                      Yes, you would eligible to remit the taxes
                                                      withheld from the employees and file with one
   As an out-of-state employer without any            collector. To do so the employer would need to
   headquarters in the state of PA but have           be willing to file monthly. Since he businesses
   employees working from home (about 80-100          payroll is located outside the state and they
   of them), can we send our remittance to one        maintain no offices in PA, the employer would      Yes. This is the employer‟s choice providing
   tax collector? How would we determine which        be free to choose the county collector they        the selected collector agrees to accept the
61 tax collector this would be?                       wished to deal with.                               reporting and remittance.



   From a very confused out of state employer - If
   there are different tax collectors for
   Municipality(Township) and school district
   would we send 1 payment to each tax
   collector? Example - employee is working
   from home and their tax liability is: West
   Brandywine Twp-.625 and Coatsville Area S.D-
   .500 with a total tax of 1.25. The Twp tax
   collector is Keystone and the SD Tax collector
   is Berkheimer. The county is Chester. In this
   case, would we send a portion of the payment       Under ACT 32 the scenario noted above
   to Keystone with the employee information and      cannot take place. All entities in a county        You should send all withheld amounts and
   a portion to Berkheimer with the employee          (municipal and SD) must use the same tax           reports to only one collector. This would be
62 information                                        collector. In this case it would be Keystone.      the collector for the work location – Keystone.
                                                       Southeaster Pennsylvania Chapter
                                                         American Payroll Association
                                                         Frequently Asked Questions
                                                            PA Local Taxes - Act 32

   ***Note Keystone Collections was asked to participate and answer the same questions, they stated they will not put anything in writing. None of the
   answers have been altered for any reason.


                      Questions                                      Berkheimer Answers                              Lancaster County Tax Collectors


                                                      Negative amounts should not be dropped. Our
                                                      format for uploading indicates negative amounts
                                                                                                            The employer should report these negative
                                                      should be identified as follows: CSV Format:
                                                      Employee Wages (Decimal point required if not
                                                                                                            wages/taxes for the affected employee.
                                                      whole dollars; minus sign allowed either before or    Negative amounts should not be dropped from
                                                      after the amount to denote a negative amount;         the reporting. This is necessary so that the
                                                      otherwise, numeric digits only – no quotes, dollar    employer‟s account is always in balance. If
                                                      signs, commas, etc.) Employee Taxes (Decimal          negative amounts are not reported it will cause
                                                      point required if not whole dollars; minus sign       the employer account to be out of balance
                                                      allowed either before or after the amount to denote   when the employer files the required annual
                                                      a negative amount; otherwise, numeric digits only     reconciliation. In addition, Act 32 requires
                                                      – no quotes, dollar signs, commas, etc.) Federal      collectors to distribute taxes received within 30
                                                      Format: Employee Wages - RIGHT JUSTIFY AND            days of receipt to the municipality and school
                                                      ZERO FILL. NO COMMA‟S – NO DECIMALS.                  districts. The negative will allow the collector
                                                      MINUS SIGN ALLOWED IN FIRST OR LAST
   What is an employer to do when there are                                                                 to take the taxes back from the appropriate
                                                      POSITION TO DENOTE NEGATIVE AMOUNT
   negative wages/taxes for a quarter because a                                                             municipality and school district to avoid
                                                      (E.G., -01746585 OR 01746585- WOULD
   check was voided and crossed quarters? The         SIGNIFY -17465.85) Employee Taxes - RIGHT             underpayment or overpayment. For example,
   negatives are being dropped from the file that     JUSTIFY AND ZERO FILL. NO COMMA‟S – NO                funds received for the 1st quarter showed $100
   is being uploaded. Is there a process in place     DECIMALS. MINUS SIGN ALLOWED IN FIRST                 due to school district A. The 2nd quarter
   for overpayments? Most common when the             OR LAST POSITION TO DENOTE NEGATIVE                   received amount showed a $50 negative
   last pay has to be voided for whatever reason      AMOUNT (E.G., -017466 OR 017466- WOULD                amount. The next distribution to school district
63 such as term or some other overpayment.            SIGNIFY -174.66)                                      A would be reduced by the $50 amount.

				
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