Nonprofit Organizations - Are You Ready for Act 32?


By Cathleen Condrac

Do you have employees working at multiple business locations within a calendar year or even within a work period? Are any of them out-of-state employees who travel to Pennsylvania? What is the true residence of student employees living on campus? What about adjunct professors teaching classes for your online master’s degree program?

If you find that you have more questions than answers about implementation of the new reporting requirements for local earned income tax - You are not alone.

Beginning January 1, 2012, Act 32 of 2008 requires employers to begin withholding local earned income tax for all employees earning income within Pennsylvania regardless of where they reside or whether they work full-time, part-time, at the same location or at multiple business locations. Typically, employers shall file and remit taxes withheld on a quarterly basis. Eligible employers with multiple locations within more than one tax collection district may opt for combined, monthly electronic reporting and remittance.

Although the Department of Community and Economic Development (DCED) has attempted to assist employers understand the complexities of Act 32, the information published by DCED addresses the more common situations, leaving unanswered the less common scenarios faced by nonprofit organizations such as:

  • What political subdivision should an employer use for reporting purposes if an employee receives instructions from the main office, but works in multiple taxing jurisdictions?
  • What are the reporting requirements for an employee who works from home?
  • What are the consequences if an employee fails to complete a residency form?

The State and Local Tax (SALT) group at Schneider Downs has been working with many nonprofit organizations to assist in resolving these unanswered questions. We invite you to contact us with any questions and concerns, in order to be in compliance with Act 32 by January 1, 2012.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person any tax-related matter.

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