Pennsylvania Act 32
The Impact of Pennsylvania Act 32 – and How BSI Has Responded
Pennsylvania Act 32 is a law that reforms and standardizes the local earned income tax (EIT) system in Pennsylvania. The appointment of collection responsibility falls on countywide committees made up of representatives from local municipalities and school districts. The committees established tax collection districts (TCDs) and elected tax officers to collect the EIT. These changes were effective on January 1, 2012 and impact Pennsylvania employers, who should be withholding local EIT from employees to comply with Pennsylvania Act 32.
Required Steps for Employers Under Pennsylvania Act 32*
Step 1: Register businesses with the tax collection district.
Get a list of PA Tax Collection Districts
Get a list of Tax Collectors and contact information for each county tax collection district
Step 2: Fill out the Residency Certification Form. This form must be filled out by the Employer and signed by the Employee. The Employer will retain this form for their records.
Step 3: Send withheld taxes for all employees to the appropriate tax collector(s)/officer(s). This can be done in two ways:
Quarterly: Within 30 days after the end of each quarter, the employer must remit withheld taxes and employee information to the tax collector/officer of each worksite-location. Quarterly Remittance Form.
Monthly: Within 30 days after the end of each month, the employer must electronically remit withheld taxes and employee information to a single tax collector/officer where the Pennsylvania corporate headquarters are located. However if the corporate headquarters are located outside the state, the company may remit withheld taxes from all employees statewide to a tax collection district of their choice upon agreement with that tax collector/officer. The electronic format for transfer of funds and information must be obtained from the applicable single tax collector/officer.
Step 4: Within 30 days of the close of each calendar year, employers complete and submit the Annual Withholding Reconciliation Form to the appropriate tax collector(s)/officer(s).
*Taken from Pennsylvania State Act 32 website
How BSI Makes it Easy
BSI has updated our compliance products to support Pennsylvania Act 32. Our products will register employees, locate, calculate, pay and file Pennsylvania Act 32 EIT.
Registering Employees for Pennsylvania Act 32
BSI eFormsFactory™ provides the necessary employee withholding certificates needed to set up your payroll records for Pennsylvania Act 32 compliance. This includes automatically providing Political Subdivision (PSD) codes needed for both resident and non-resident municipalities.
Locating Pennsylvania Act 32 Taxes
Our tax location tool has been updated to handle the new tax boundaries created as a result of Pennsylvania Act 32. For example, in some cases, BSI used to identify a township with a single authority code. Pennsylvania Act 32 has given us cause to split the township and create two authority codes. We have identified 50+ cases where Pennsylvania Act 32 has caused a split authority.
Calculating Pennsylvania Act 32 Taxes
Our flagship product, BSI TaxFactory™, has been updated to automatically convert all local reciprocal calculations to compare the total resident EIT rate (municipality plus school district) to the non-resident EIT rate. We are using the larger rate and calculating accordingly. Customers did not need to make any interface changes to obtain this new behavior.
Paying and Filing Pennsylvania Act 32 Taxes
Our compliance management product for filing and depositing, BSI ComplianceFactory™, has been updated to pay and file Act 32 EIT. We will support available report formats and deposit frequencies. This will include special reporting requirements for multi-site employers. BSI ComplianceFactory also automatically populates filings with the required PSD codes for both residents and non-residents. Your payroll can process as usual, and we’ll handle the details.
Call 888-293-3413, ext. 151, if you want more information.