IMPORTANT NOTICE FOR PENNSYLVANIA EMPLOYERSPennsylvania Act 32 of 2008 provided for the restructuring of the Earned Income Tax Collection

System for local governments and school districts covered by the Local Tax Enabling Act. As

of January 1, 2012, the Earned Income Tax Collection System will be restructured into 69

Tax Collection Districts (TCD), predominately based on county boundaries. The collection of

taxes for each TCD will be handled by a “certified” tax collector designated by Pennsylvania’s

Department of Community and Economic Development (DCED). Employers must fully

implement the changes contained in Act 32 beginning on January 1, 2012. 

What employers need to do as a result of amendments to Act 32

1. RegisteR With the AppRopRiAte tAx ColleCtoR (if NeCessARy)

Employers should ensure that they are registered with the appropriate Certified Tax Collector for their area. To determine the appropriate tax collector go to http://munstatspa.dced.state.pa.us/, and indicate your county or municipality.

2. hAve eACh peNNsylvANiA-BAsed WoRkeR Complete A “ResideNCy CeRtifiCAtioN foRm”.

Employers will need to have all Pennsylvania-based employees complete a “Residency Certification Form”. This form can be found on the DCED’s website at www.newpa.com in the forms section or by using the link http://www.newpa.com/webfm_send/1605.

A properly completed certificate requires listing the appropriate Political Subdivision Code (PSD) for each Pennsylvania-based employee’s lived in and worked in localities. The certificate refers to the information necessary to look up the appropriate PSD codes.

3. estABlish psd Codes ANd tAx RAtes foR eACh peNNsylvANiA-BAsed WoRkeR

Update Employerswillnowberequired towithhold

and report local income taxes for allemployees,whetherresidentornon-resident,working in their Pennsylvania businesslocation. The withholding tax rate will bedeterminedforeachemployeebycomparingthehighestratebetweentheirnon-residentworksite and residence location rates. Theemployer should withhold and remit thehigher of the two tax rates to the CertifiedTax Collector for each of its Pennsylvaniaemploymentlocations.

hR. payroll. Benefits.

NEWUPDATENovEmbEr17Th

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4. Notify AffeCted employees of ANy ChANges

It may be helpful to advise Pennsylvania-based employees that their local income tax withholding may change beginning in 2012; particularly if you did not withhold local taxes for jurisdictions outside of the locality in which your business is located. Some employees are likely to notice a change in the amount of their withholding for the Earned Income Tax (EIT).

About Adp

ADP is committed to assisting businesses with increased compliance requirements resulting from rapidly evolving legislation. Our goal is to minimize your administrative burden across the spectrum of payroll, tax, HR and benefits, so that you can focus on running your business. Neither the content nor the manner in which this notice is presented reflects the thoughts or opinions of ADP or its employees. This notice is provided as a courtesy to our clients, to assist in understanding the impact of certain regulatory requirements, and should not be construed as tax or legal advice. Such information is by nature subject to revision and may not be the most current information available. ADP encourages interested readers to consult with appropriate legal and/or tax advisors.

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This content is subject to change and is provided solely as a courtesy and should not be construed as tax or legal advice.

Employers will also be required to report a PSD code for both the residence and employment locations of each employee when remitting and filing withholding tax reports. The assigned PSD code for Pennsylvania local jurisdictions can be found at http://munstatspa.dced.state.pa.us/ and entering the applicable county and/or municipality. PSD codes can also be found by using the “Find Your Withholding Rates by Address” link http://munstatspa.dced.state.pa.us/FindLocalTax.aspx.

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