OUR THOUGHTS ON:

Pennsylvania 1099-MISC Update from the Department

State and Local Tax

By Matthew Dodge

Businesses and organizations have been struggling to implement the withholding and reporting obligations passed under Act 43 of 2017.  Act 43 requires withholding on payments to non-resident individuals of Pennsylvania-source income, including lessors.  The withholding and reporting law was passed in October 2017, but the issues surrounding it may not have been fully appreciated by taxpayers until December, when the Pennsylvania Department of Revenue issued an Informational Notice on the subject.

Since the release of that Informational Notice by the Department, taxpayers have asked many questions, not least of which is, how to timely implement the withholding and reporting requirements on such short notice.  The Pennsylvania Institute of Certified Public Accountants (PICPA) took up the cause on behalf of clients and taxpayers, and, in late January, sent a letter to the Department requesting a one-year delay in the implementation of the new 1099-MISC reporting, citing the challenges and burdens of implementing the new reporting requirements.

The Department stated, in its response to the PICPA’s request, that no assessments will be made for failing to withhold 1099-MISC income for periods prior to July 1, 2018.  The Department does expect taxpayers to file 1099-MISC with the Department by January 2019.  The Department also indicated that it will be providing updated guidance in the coming weeks and months that will be available on the website www.revenue.pa.gov.  Currently, the website includes a revised Information Notice and Fact Sheet (see links below) on the withholding requirements.  More developments related to the 1099-MISC withholding requirement are expected, so check our website for updates.

http://www.revenue.pa.gov/GeneralTaxInformation/TaxLawPoliciesBulletinsNotices/Documents/Informational%20Notices/info_notice_pit_2017-01.pdf

http://www.revenue.pa.gov/GeneralTaxInformation/Tax%20Types%20and%20Information/EmployerWithholding/Documents/1099-MISC_Fact_Sheet.pdf

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