Act 32 of 2008 is a Pennsylvania law that was passed with the intention of simplifying the way local Earned Income Tax (EIT) is paid and collected throughout the state. Although the Act was passed in 2008, the major changes recently went into effect as of January 1, 2012 (July 1, 2011 in Chester County). The new law brings two significant changes to the state. First it consolidates collection mainly along county lines by requiring all taxing jurisdictions within a specified geographic area to jointly select one tax collector to serve the entire area. Each of the areas is called a Tax Collection District (TCD). This is a welcome change to employers who have long struggled with the burden of deciphering which of the over 500 local tax collectors have jurisdiction over them and then having to deal with the inconsistencies of each authority. The second major change is that employers are now required to withhold the higher of the employee’s resident earned income tax amount (rate of EIT where they reside) vs. the employee’s municipal non-resident earned income tax amount (rate of non-resident EIT where they are employed). This will require employers to compare rates between TCDs. Employers are also required to obtain a Residency Certification Form for every employee which requires employees to certify their home address and corresponding Political Subdivision Codes (PSD). The PSD codes have been formulated to designate each of the 69 TCDs, along with the school districts and municipalities therein.
941 Payroll has extensive experience dealing with Pennsylvania local taxes. Please contact us if you have any questions and we would be happy to assist you