THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY BAKER, PIPPY, ROBBINS, SOLOBAY, MENSCH, TOMLINSON, WARD, WAUGH, D. WHITE, BREWSTER, YUDICHAK, BRUBAKER, COSTA, EICHELBERGER, ERICKSON, FERLO, FOLMER, FONTANA, KASUNIC, ORIE, RAFFERTY, SMUCKER, VOGEL AND M. WHITE, FEBRUARY 3, 2011

REFERRED TO FINANCE, FEBRUARY 3, 2011  

AN ACT

Amending the act of December 31, 1965 (P.L.1257, No.511),

entitled "An act empowering cities of the second class,

cities of the second class A, cities of the third class,

boroughs, towns, townships of the first class, townships of

the second class, school districts of the second class,

school districts of the third class and school districts of

the fourth class including independent school districts, to

levy, assess, collect or to provide for the levying,

assessment and collection of certain taxes subject to maximum

limitations for general revenue purposes; authorizing the

establishment of bureaus and the appointment and compensation

of officers, agencies and employes to assess and collect such

taxes; providing for joint collection of certain taxes,

prescribing certain definitions and other provisions for

taxes levied and assessed upon earned income, providing for

annual audits and for collection of delinquent taxes, and

permitting and requiring penalties to be imposed and

enforced, including penalties for disclosure of confidential

information, providing an appeal from the ordinance or

resolution levying such taxes to the court of quarter

sessions and to the Supreme Court and Superior Court," in

consolidated collection of local income taxes, further

providing for definitions.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definition of "earned income" in section 501

of the act of December 31, 1965 (P.L.1257, No.511), known as The

Local Tax Enabling Act, added July 2, 2008 (P.L.197, No.32), is

amended to read:

Section 501.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Earned income."  The compensation as required to be reported

to or as determined by the Department of Revenue under section

303 of the act of March 4, 1971 (P.L.6, No.2), known as the Tax

Reform Code of 1971, and rules and regulations promulgated under

that section[.] subject to the following:

(1)  Employee business expenses as reported to or

determined by the Department of Revenue under Article III of

the Tax Reform Code of 1971 shall constitute allowable

deductions in determining earned income.

(2)  The term does not include [offsets]:

(i)  Wages or compensation paid to individuals on

active military service, regardless of whether it is

earned for active military service inside or outside this

Commonwealth.

(ii)  Offsets for business losses.

(iii)  The amount of any housing allowance provided

to a member of the clergy [shall not be taxable as earned

income].

* * *

Section 2.  This act shall take effect in 60 days.