PENNSYLVANIA ACT 32 - EARNED INCOME TAX
CHANGES FOR 2012. Starting
January 1, 2012,
all Pennsylvania employers (excluding those in Philadelphia) must withhold
the local earned income tax as part of their payroll obligations. Act
32 fundamentally changes your business role in collecting Earned Income
Taxes. To see a brief overview of the requirements, click
EIT Collection under Act 32 and the Role of the Tax Collection Committee
In 2004, the Department of Community and Economic Development (DCED) undertook a study which resulted in Act 32 of 2008. Act 32 reduced the 560 Earned Income Tax (EIT) collection entities across Pennsylvania to 69 Tax Collection Districts (TCD). Most TCDs, such as Allegheny County’s TCD, are contained within county boundaries. However, School Districts that overlap county boundaries are included in the TCD where the majority of its population lives.
The Allegheny County TCD is governed by four Tax Collection Commissions (TCC). Each School District and Municipality within the TCD that levies an EIT either has or should immediately appoint a voting delegate and each that does not levy an EIT are permitted to appoint a non-voting delegate. TCC delegates vote on committee actions and are subject to the Right to Know Law, the Sunshine Act and the Ethics Act. The annual budget of the TCC will be paid by the member taxing jurisdictions, prorated according to their shares of EIT revenue.
The most important task of the TCC is the appointment of the tax collector which must occur by September 15, 2010. The TCC is also responsible for the oversight of the tax collector, including setting the tax collector’s bond and arranging for the tax collector to be audited at least once annually. The audits will be provided to every political subdivision within the TCC. If the TCC fails to appoint a tax collector by September 15, 2010, one will be appointed by the Allegheny County Court of Common Pleas. After the tax collector is appointed, the School Districts/Municipalities within the TCC must decide if their current tax collector will collect their EIT or whether the new TCC tax collector will collect it in 2011. This option applies only to 2011 EIT and must be made by November 1, 2010. EIT collection by the TCD tax collector begins and is mandatory for all School Districts/Municipalities on January 1, 2012.