Act 32 - Local Tax Collection

Act 32 of 2008 ushered in significant reforms and consolidation of Pennsylvania’s earned income tax (EIT) collection system. Under Act 32, the earned income tax collection process was restructured, creating 69 countywide Tax Collection Districts (TCD). The PICPA worked diligently with legislators to develop and pass legislation that improves the business environment in Pennsylvania and will continue to work on managing issues post-implementation.  

This streamlined local tax collection system is more efficient, allowing revenues to be transferred more expediently. Uniform forms and procedures required by Act 32 will add to consistent and uniform collection.

Act 32 Articles

Taxpayers Win as Court Upholds Philadelphia “Super Credit”

Jan. 2013
In Berks County Tax Collection Committee, et al. v. The Pennsylvania Department of Community and Economic Development, the court rejected a motion filed by several county tax collection committees to overturn nearly 30 years of precedent, thus maintaining the established interpretation of the so-called Philadelphia “super credit.” Read more.

Taxpayers 1 – Tax Collectors 0

Jan. 2013, Peter Calcara
In Berks County Tax Collection Committee, et al. v. The Pennsylvania Department of Community and Economic Development, the court rejected a motion filed by several county tax collection committees to overturn nearly 30 years of precedent, thus maintaining the established interpretation of the so-called Philadelphia “super credit.” Read more.

Resources

  • Act 32 Checklist
  • The PICPA Act 32 Tax Collection Task Force
    The Act 32 Tax Collection Task Force was established to facilitate discussion between the PICPA members serving as County Tax Collection Committee (TCC) delegates across the state. The goal of the task force is to provide necessary resources to implement Act 32 of 2008 to streamline and reform Pennsylvania’s local earned income tax collection system.

Top Questions and Answers Related to EIT

Q: What is the proper withholding rate? 
A: The proper rate to withhold is the higher of the nonresident rate for the jurisdiction in which the employee’s worksite is located or the resident rate for the jurisdiction where the employee resides. 

Q: How do you handle situations where the worksite nonresident rate exceeds the employee’s resident rate? 
A: Under Act 32, which is the same as Act 511 in this regard, if the nonresident worksite rate is higher than the employee’s resident rate, the difference between the rates stays in the worksite jurisdiction. 

Q:What are the withholding considerations when employees work in temporary locations, such as a construction job?
A: There are three considerations when it comes to answering this question. First, if the employee is sent to a worksite in Philadelphia, the Philadelphia wage tax is withheld instead of a local tax. Second, if the employee is sent to a worksite with a temporary trailer, and the employee takes orders from the trailer, the employer location is the worksite. Third, if the employee is sent to a worksite without a temporary trailer or if the employee still takes orders from the home office when there is a trailer, the employer location depends upon the length of the assignment. If the assignment is less than a continuous three-month period, the home office remains the employer location. If the assignment is over three months, the worksite becomes the employer location.