Local Taxation in PA

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Local Taxation in PA

Information for all Pennsylvania Employers, outside of Philadelphia

Effective January 1, 2012, pursuant to PA Act 32, there was a new filing and payment system for the remittance of Local Earned Income Tax (EIT) in Pennsylvania. Previously, each municipality and school district in Pennsylvania was responsible for the collection and administration of its own earned income tax. Many municipalities hired outside tax collection services such as Berkheimer, Centax and Keystone Tax Bureau to name a few, to handle the administration of the EIT.

Effective January 1, 2012 this changed. Chester and Lebanon Counties chose to implement these changes effective January 1, 2011.

The following are the steps employers must take to be compliant with the regulations:

Determine if you need to register with the tax collector in your region.

Designated Tax Collectors by County in Philadelphia Region

Residency Certification Form

All employers must have every employee complete a Residency Certification form. The employee must look up their 6 digit "PSD Code". The employer must retain the completed forms.

Determine the rate of withholding.

The rate the employer withholds will be the higher of the employer's rate or the employee's rate. You may need to update any software you use for processing payroll with the current rates, which, can be found at http://munstats.pa.gov/Public/FindLocalTax.aspx.

Employer to remit tax to their taxing authority quarterly.

Updated: February 2016

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