Pennsylvania Act 32 Registration Process

Pennsylvania Senate Bill 1063 was signed into law as Act 32 in 2008 and will be effective for all Pennsylvania counties, except Philadelphia no later than January 1, 2012.  Act 32 is restructuring the Earned Income Tax Collection System in Pennsylvania.

As many wage earners in Pennsylvania know, paying your local earned income tax obligation can be burdensome.  Typically, they have to be paid on a quarterly basis unless your employer withholds the tax on your behalf.  Act 32 mandates an established county-based collection process which requires employers to submit local income tax payments withheld from employees to a single county-wide tax collector who will then disburse the funds to the employees’ resident tax agency.

Act 32 will eliminate split tax collectors and will have one Act 32 collector for each tax collection district.  This should be a benefit to employers considering they will no longer need to submit withholding taxes to multiple taxing agencies.  Employers with multiple locations may voluntarily remit withholding taxes to the Act 32 collector where their payroll process occurs.

Employers will need to register with their district Act 32 collector and must have each employee complete a certificate of residency.  Additionally, the employer will be required to withhold tax at the greater of either the employees’ resident jurisdiction rate or the nonresident rate of the employees' tax jurisdiction.

Since the Act will be in effect for most Pennsylvania counties until January 1, 2012, the employers will have time to prepare for the consolidation.  Please feel free to contact DJ Loughran or your Schneider Downs representative should you have any questions or need assistance with the registration process.

Additionally, please use this website link for additional Act 32 information from the Pennsylvania Association of School Business Officials (PASBO).

Schneider Downs provides accounting, tax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH.

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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