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What is Act 32?
Act 32 is a law that streamlines and standardizes the local earned income tax system. Act 32 reduces Pennsylvania’s number of Earned Income Tax (EIT) collectors from 560 to 21. 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 and elected tax officers to collect the EIT.
Act 32 requires uniform withholding of earned income taxes and remittance to a single local collector or Tax Officer. The act applies to the earned income taxes levied and collected after December 31, 2011. Appointed tax officers start collecting the EIT on January 1, 2012 unless the tax collection district has been approved for early implementation.
Changes in Withholding Responsibility
All employers, located in Pennsylvania, must withhold for both residents and nonresidents, who have earned income tax where they reside and/or work. Employers located in political subdivisions who do not have a tax in place will be required to withhold taxes due to their employee’s place of residence and remit them to the Tax Officer.
Each employer shall require each employee to complete a Certificate of Residency form. You will find a Certificate of Residency form attached. This form shall provide information to help identify the political subdivisions where the employee lives and works. This form must be updated any time an employee has a change of address. The completed form is required to be retained by the employer and is subject to audit by the tax officer
The withholding tax rate is determined by the employee’s resident tax rate or the employer jurisdiction’s non-resident tax rate, whichever is greater.
In preparation for your business to be in compliance with the Pennsylvania Local Act 32 legislation you will need to contact your payroll company to receive instructions on submitting your employee’s Certificates of Residency.
If you have any questions, please contact our office and we will be happy to assist you. We are on the web – feel free to visit us there for important information and updates!
Employment Eligibility Verification (I-9) Form Information
Homeland Security is taking an active role in enforcing the Form I-9, Employment Eligibility Verification Form. While this form has been required for many years, recently the importance of maintaining a completed I-9 form in each employees file has become mandatory. Please read the following information in order to be sure you comply with this regulation. It is important to note the I-9 form does not get filed with any agency; it is kept in the employee’s personal file in case proof of employment eligibility is requested by Homeland Security or any other government agency.
Under federal law, all employers — including the smallest of employers — must have a form on file that verifies the employment eligibility and identity of each employee. The Immigration Reform and Control Act requires all U.S. employers to complete the Employment Eligibility Verification form (Form I-9) for all employees, including U.S. citizens.
Every employer must have a Form I-9 in its files for each employee, unless the employee was hired before November 7, 1986, and has been continuously employed by the same employer. Fines for failure to comply with Form I-9 completion and verification rules are substantial.
Newly hired employees must complete a verification form within three business days of hire. It is illegal to discriminate against legal aliens based on citizenship status or national origin. The I-9 form is not to be completed until the employee has reported to work.
Many documents will legally establish employment eligibility. Among these are a U.S. passport, driver’s license, social security card, certified copy of birth certificate, and permanent resident card. There are other documents listed on the instructions which accompany Form I-9. Be careful to note in the instructions that sometimes one document alone will suffice and other times it takes two.
If you have any questions – please contact our office or visit us on the web www.jpcatcpa.com.
Tax Planning Letter
As 2017 begins, the odds of comprehensive tax reform look promising. Individual, business, and estate tax rules could undergo major changes for the first time in 30 years. The Affordable Care Act will likely be revised in ways that affect information filing requirements, payment of penalties, and fringe benefits. While a proposed plan for reform exists, the extent, timing, and details will be subject to debate and discussion.