1Amending the act of December 31, 1965 (P.L.1257, No.511),
2entitled "An act empowering cities of the second class,
3cities of the second class A, cities of the third class,
4boroughs, towns, townships of the first class, townships of
5the second class, school districts of the second class,
6school districts of the third class and school districts of
7the fourth class including independent school districts, to
8levy, assess, collect or to provide for the levying,
9assessment and collection of certain taxes subject to maximum
10limitations for general revenue purposes; authorizing the
11establishment of bureaus and the appointment and compensation
12of officers, agencies and employes to assess and collect such
13taxes; providing for joint collection of certain taxes,
14prescribing certain definitions and other provisions for
15taxes levied and assessed upon earned income, providing for
16annual audits and for collection of delinquent taxes, and
17permitting and requiring penalties to be imposed and
18enforced, including penalties for disclosure of confidential
19information, providing an appeal from the ordinance or
20resolution levying such taxes to the court of quarter
21sessions and to the Supreme Court and Superior Court,"
22providing for the definition of "farming";<- and further
23providing for declaration and payment of income taxes and for
24withholding and remittance<-; and providing for optional 
25property tax elimination.

26The General Assembly of the Commonwealth of Pennsylvania
27hereby enacts as follows:

28Section 1. Section 501 of the act of December 31, 1965

1(P.L.1257, No.511), known as The Local Tax Enabling Act, is
2amended by adding a definition to read:

3Section 501. Definitions.

4The following words and phrases when used in this chapter
5shall have the meanings given to them in this section unless the
6context clearly indicates otherwise:

7* * *

8"Farming." Includes all activities that are farming for 
9purposes of section 325 of the act of March 4, 1971 (P.L.6, 
10No.2), known as the Tax Reform Code of 1971.

11* * *

12Section 2. Section 502(c) of the act, added July 2, 2008
13(P.L.197, No.32), is amended and the section is amended by
14adding subsections to read:

15Section 502. Declaration and payment of income taxes.

16* * *

17(c) Declaration and payment.--Except as provided in
18[subsection (a)(2)] subsections (a)(2) and (d), taxpayers shall
19declare and pay income taxes as follows:

20(1) Every taxpayer shall, on or before April 15 of the
21succeeding year, make and file with the resident tax officer,
22a final return showing the amount of taxable income received
23during the period beginning January 1 of the current year and
24ending December 31 of the current year, the total amount of
25tax due on the taxable income, the amount of tax paid, the
26amount of tax that has been withheld under section 512 and
27the balance of tax due. All amounts reported shall be rounded
28to the nearest whole dollar. At the time of filing the final
29return, the taxpayer shall pay the resident tax officer the
30balance of the tax due or shall make demand for refund or

1credit in the case of overpayment. Taxpayers may use the 
2Annual Local Earned Income Tax Return form available from the 
3department's Internet website to file the final return.

4(2) (i) Every taxpayer making net profits shall, by
5April 15 of the current year, make and file with the
6resident tax officer a declaration of the taxpayer's
7estimated net profits during the period beginning January
81 and ending December 31 of the current year, and shall
9pay to the resident tax officer in four equal quarterly
10installments the tax due on the estimated net profits.
11The first installment shall be paid at the time of filing
12the declaration, and the other installments shall be paid
13on or before [June] July 15 of the current year,
14[September] October 15 of the current year and January 15
15of the succeeding year, respectively.

16(ii) Any taxpayer who first anticipates any net
17profit after April 15 of the current year shall make and
18file the declaration required on or before [June] July 15
19of the current year, [September] October 15 of the
20current year or [December 31 of the current year] January 
2115 of the succeeding year, whichever date next follows
22the date on which the taxpayer first anticipates such net
23profit, and shall pay to the resident tax officer in
24equal installments the tax due on or before the quarterly
25payment dates that remain after the filing of the
26declaration.

27(ii.1) A taxpayer will be considered to have met the
28requirements for declaration and minimum payment of
29estimated tax for any year in which the taxpayer timely
30declares and makes quarterly payments of estimated tax in

1amounts that equal at least one-fourth of the total
2income tax due and not withheld under section 512 in the
3previous year, provided that the taxpayer can show
4through the taxpayer's annual income tax return filed for
5the previous year that tax liability was incurred.

6(iii) Every taxpayer shall, on or before April 15 of
7the succeeding year, make and file with the resident tax
8officer a final return showing the amount of net profits
9earned or received based on the method of accounting used
10by the taxpayer during the period beginning January 1 of
11the current year, and ending December 31 of the current
12year, the total amount of tax due on the net profits and
13the total amount of tax paid. At the time of filing the
14final return, the taxpayer shall pay to the resident tax
15officer the balance of tax due or shall make demand for
16refund or credit in the case of overpayment. Any taxpayer
17may, in lieu of paying the fourth quarterly installment
18of the estimated tax, elect to make and file with the
19resident tax officer on or before January 31 of the
20succeeding year, the final return.

21(iv) The department, in consultation with the
22Department of Revenue, shall provide by regulation for
23the filing of adjusted declarations of estimated net
24profits and for the payments of the estimated tax in
25cases where a taxpayer who has filed the declaration
26required under this subsection anticipates additional net
27profits not previously declared or has overestimated
28anticipated net profits.

29(v) Every taxpayer who discontinues business prior
30to December 31 of the current year, shall, within 30 days

1after the discontinuance of business, file a final return
2as required under this paragraph and pay the tax due.

3(3) Every taxpayer who receives any other taxable income 
4not subject to withholding under section 512(3) shall make 
5and file with the resident tax officer a quarterly return on 
6or before April 15 of the current year, [June] July 15 of the 
7current year, [September] October 15 of the current year, and 
8January 15 of the succeeding year, setting forth the 
9aggregate amount of taxable income not subject to withholding 
10by the taxpayer during the three-month periods ending March 
1131 of the current year, June 30 of the current year, 
12September 30 of the current year, and December 31 of the 
13current year, respectively, and subject to income tax, 
14together with such other information as the department may 
15require. Every taxpayer filing a return shall, at the time of 
16filing the return, pay to the resident tax officer the amount 
17of income tax due. The department shall establish criteria 
18under which the tax officer may waive the quarterly return 
19and payment of the income tax and permit a taxpayer to file 
20the receipt of taxable income on the taxpayer's annual return 
21and pay the income tax due on or before April 15 of the 
22succeeding year.

23(4) If any date prescribed in this section for filing or
24payment of tax should fall on a Saturday, Sunday or legal
25holiday, the taxpayer may file or make payment on the next
26business day.

27(d) Filing of estimated tax by taxpayers whose major source
28of gross income is from farming.--Notwithstanding any other
29provision of this section, a declaration of estimated tax of an
30individual having an estimated gross income from farming for the

1taxable year which is at least two-thirds of his total estimated
2gross income for the taxable year may be filed at any time on or
3before January 15 of the succeeding year, but if the farmer
4files a final return and pays the entire tax by March 1, the
5return may be considered as his declaration due on or before
6January 15.

7(e) Restrictions.--In administering the provisions of this
8section, no political subdivision, tax collection committee or
9tax officer may:

10(1) Prohibit a taxpayer from filing any return or
11declaration required under this section in person or by first
12class mail.

13(2) Prohibit a taxpayer from filing any local income tax
14return form, estimated tax return form or other form related
15to any filing required under this section that has been
16posted by the department on its Internet website.

17(3) Impose a penalty for failing to timely file a
18quarterly estimated tax return for which no payment of
19estimated tax was due, as shown in the taxpayer's annual
20income tax return.

21Section 3. Section 512 of the act, added July 2, 2008
22(P.L.197, No.32), is amended to read:

23Section 512. Withholding and remittance.

24(a) General rule.--For taxable years commencing on and after
25January 1, 2012, or earlier taxable years if specified by a tax
26collection district, income taxes shall be withheld, remitted
27and reported as follows:

28(1) Every employer having an office, factory, workshop, 
29branch, warehouse or other place of business within a tax 
30collection district who employs one or more persons, other
 

1than domestic servants, for a salary, wage, commission or 
2other compensation, who has not previously registered, shall, 
3within 15 days after becoming an employer, register with the 
4tax officer the name and address of the employer and such 
5other information as the department may require.

6(2) An employer shall require each new employee to
7complete a certificate of residency form, which shall be an
8addendum to the Federal Employee's Withholding Allowance
9Certificate (Form W-4). An employer shall also require any
10employee who changes their address or domicile to complete a
11certificate of residency form. Upon request, certificate of
12residency forms shall be provided by the department. The
13certificate of residency form shall provide information to
14help identify the political subdivisions where an employee
15lives and works.

16(3) Every employer having an office, factory, workshop, 
17branch, warehouse or other place of business within a tax 
18collection district that employs one or more persons, other 
19than domestic servants, for a salary, wage, commission or 
20other compensation, shall, at the time of payment, deduct 
21from the compensation due each employee employed at such 
22place of business the greater of the employee's resident tax 
23or the employee's nonresident tax as released in the official 
24register under section 511.

25(4) Except as set forth in paragraph (5), [within 30
26days] by the last day of the month following the end of each
27calendar quarter, every employer shall file a quarterly
28return and pay the amount of income taxes deducted during the
29preceding calendar quarter to the tax officer for the place
30of employment of each employee. The form shall show the name,

1address and Social Security number of each employee, the
2compensation of the employee during the preceding three-month
3period, the income tax deducted from the employee, the
4political subdivisions imposing the income tax upon the
5employee, the total compensation of all employees during the
6preceding calendar quarter, the total income tax deducted
7from the employees and paid with the return and any other
8information prescribed by the department.

9(5) Notwithstanding paragraph (4), the provisions of
10this paragraph shall apply if an employer has more than one
11place of employment in more than one tax collection district.
12[Within 30 days following the last day of each month] On or 
13before the last day of the month succeeding the month for 
14which the return required by paragraph (4) is due, the
15employer may file the return [required by paragraph (4)] and
16pay the total amount of income taxes deducted from employees
17in all work locations during the preceding month to the tax
18officer for either the tax collection district in which the
19employer's payroll operations are located or as determined by
20the department. The return and income taxes deducted shall be
21filed and paid electronically. The employer must file a
22notice of intention to file combined returns and make
23combined payments with the tax officer for each place of
24employment at least one month before filing its first
25combined return or making its first combined payment. This
26paragraph shall not be construed to change the location of an
27employee's place of employment for purposes of nonresident
28tax liability.

29(6) Any employer who, for two of the preceding four 
30quarterly periods, has failed to deduct the proper income
 

1tax, or any part of the income tax, or has failed to pay over 
2the proper amount of income tax as required by paragraph (3) 
3to the tax collection district, may be required by the tax 
4officer to file returns and pay the income tax monthly. In 
5such cases, payments of income tax shall be made to the tax 
6officer on or before the last day of the month succeeding the 
7month for which the income tax was withheld.

8(7) On or before February 28 of the succeeding year,
9every employer shall file with the tax officer where income
10taxes have been deducted and remitted pursuant to paragraph
11(3):

12(i) An annual return showing, for the period 
13beginning January 1 of the current year and ending 
14December 31 of the current year, the total amount of 
15compensation paid, the total amount of income tax 
16deducted, the total amount of income tax paid to the tax 
17officer and any other information prescribed by the 
18department.

19(ii) An individual withholding statement, which may 
20be integrated with the Federal Wage and Tax Statement 
21(Form W-2), for each employee employed during all or any 
22part of the period beginning January 1 of the current 
23year and ending December 31 of the current year, setting 
24forth the address and Social Security number, the amount 
25of compensation paid to the employee during the period, 
26the amount of income tax deducted, the amount of income 
27tax paid to the tax officer, the numerical code 
28prescribed by the department representing the tax 
29collection district where the payments required by 
30paragraphs (4) and (5) were remitted and any other
 

1information required by the department. Every employer 
2shall furnish one copy of the individual withholding 
3statement to the employee for whom it is filed.

4(8) Any employer who discontinues business prior to
5December 31 of the current year shall, within 30 days after
6the discontinuance of business, file returns and withholding
7statements required under this section and pay the income tax
8due.

9(9) Except as otherwise provided in section 511, an
10employer who willfully or negligently fails or omits to make
11the deductions required by this subsection shall be liable
12for payment of income taxes which the employer was required
13to withhold to the extent that the income taxes have not been
14recovered from the employee. The failure or omission of any
15employer to make the deductions required by this section
16shall not relieve any employee from the payment of the income
17tax or from complying with the requirements for filing of
18declarations and returns.

19(b) Date of filing.--If any date prescribed in this section
20for filing or payment of tax should fall on a Saturday, Sunday
21or legal holiday, the filing or payment may be performed on the
22next business day.

<-23(c) Forms.--In administering the provisions of this section,
24no political subdivision, tax collection committee or tax
25officer may prohibit the use or filing of any applicable form
26posted by the department on its Internet website to meet the
27requirements of this section.

<-28Section 3.1. The act is amended by adding a chapter to read:

29CHAPTER 6

30OPTIONAL PROPERTY TAX ELIMINATION

1Section 601. Scope of chapter.

2This chapter shall authorize a school district to levy,
3assess and collect an elimination tax as a means of reducing or
4eliminating property taxation.

5Section 602. Definitions.

6The following words and phrases when used in this chapter
7shall have the meanings given to them in this section unless the
8context clearly indicates otherwise:

9"Board of school directors." A board of school directors of
10a school district of the first class A, second class, third
11class or fourth class.

12"Domicile." The term as defined in section 501.

13"Earned income." The term as defined in section 501.

14"Elimination tax." Any of the following:

15(1) The tax levied by a school district on earned income
16and net profits under this chapter.

17(2) A mercantile tax imposed under section 613.

18(3) A business privilege tax imposed under section 613.

19"Index." The term as defined in section 302 of the Taxpayer
20Relief Act.

21"Net profits." The term as defined in section 501.

22"Resident." The term as defined in section 501.

23"School district." A school district of the first class A,
24second class, third class or fourth class.

25"Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
26known as the Tax Reform Code of 1971.

27"Taxpayer Relief Act." The act of June 27, 2006 (1st
28Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief Act.

29Section 603. Preemption.

30No act of the General Assembly may vacate or preempt any

1resolution passed or adopted under the authority of this
2chapter, or any other act, providing authority for the
3imposition of an elimination tax by a school district, unless
4the act of the General Assembly expressly vacates or preempts
5the authority to pass or adopt resolutions.

6Section 604. Real property tax replacement.

7A school district that levies a tax on real property may
8reduce or eliminate the revenues provided by the real property
9tax by imposing the elimination tax as provided under this
10chapter.

11Section 605. Resolution required.

12The board of school directors may impose or increase the
13maximum limits of the elimination tax by adopting a resolution.
14Prior to approving the resolution, the board of school directors
15shall:

16(1) Give public notice of its intent to adopt the
17resolution in the manner provided under section 306.

18(2) Conduct at least one public hearing regarding
19reducing or eliminating the tax on real property and imposing
20or increasing the maximum rate of the elimination tax.

21Section 606. Use of funds.

22All funds generated from an elimination tax shall be used to
23directly reduce or eliminate school district real property tax
24millage rates.

25Section 607. Elimination tax rate limits.

26(a) Limit.--If a school district has reduced property tax
27millage rates to zero, a board of school directors may not
28increase the elimination tax for the support of public schools
29by more than the index unless there is compliance with section
30333 of the Taxpayer Relief Act.

1(b) Maximum rate.--The maximum rate of the elimination tax
2calculated under this chapter shall not be subject to the limits
3on the earned income tax specified under section 311(3).

4(c) Limit.--The rate of the mercantile or business privilege
5tax imposed under section 613 shall not generate revenues in
6excess of 50% of the total elimination tax revenues generated
7under this chapter.

8Section 608. Exemption.

9A school district that imposes an elimination tax may exempt
10from the payment of that tax any person whose total income from
11all sources is less than $12,000.

12Section 609. Collections.

13(a) Earned income and net profits.--An elimination tax on
14earned income and net profits shall be subject to Chapters 5 and
157.

16(b) Mercantile tax or a business privilege tax.--A
17mercantile tax or a business privilege tax imposed under this
18chapter shall be subject to section 613.

19Section 610. Credits.

20(a) Credit.--Except as provided under subsection (b), the
21provisions of section 317 shall be applied by a board of school
22directors to determine any credits applicable to an elimination
23tax.

24(b) Limitation.--Payment of a tax on earned income and net
25profits to any state other than Pennsylvania or to any political
26subdivision located outside the boundaries of this Commonwealth
27by a resident of a school district located in this Commonwealth
28shall not be credited to and allowed as a deduction from the
29liability of the person for an elimination tax imposed by the
30school district of residence.

1Section 611. Real property tax prohibited.

2(a) Prohibition.--For the first fiscal year beginning after
3the adoption of a resolution that eliminates real property tax
4millage rates and each fiscal year thereafter, a school district
5shall be prohibited from levying, assessing or collecting a real
6property tax.

7(b) Applicability.--This section shall not apply to the
8collection of delinquent real property taxes.

9Section 612. Applicability of personal income tax.

10Nothing under this chapter shall be construed to authorize a
11school district to levy, assess or collect a personal income
12tax.

13Section 613. Mercantile or business privilege tax.

14(a) Wholesale dealers.--Each school district shall have the
15power and may levy, assess and collect a tax on each dollar of
16the whole volume of business transacted by wholesale dealers in
17goods, wares and merchandise.

18(b) Retail sales.--Each school district shall have the power
19and may levy, assess and collect a tax on each dollar of sales
20by:

21(1) Retail dealers in goods, wares and merchandise,
22including proprietors of restaurants or other places where
23food, drink and refreshments are served.

24(2) Providers of services.

25(c) Transactions partially free of tax.--No tax shall be
26levied on the dollar volume of business transacted by wholesale
27and retail dealers derived from the resale of goods, wares and
28merchandise, taken by any dealer as a trade-in or as part
29payment for other goods, wares and merchandise, except to the
30extent that the resale price exceeds the trade-in allowance.

1Section 614. Exclusions from tax.

2A tax under section 613 may not be levied, assessed or
3collected on:

4(1) The gross receipts from utility service of any
5person or company whose rates and services are fixed and
6regulated by the Pennsylvania Public Utility Commission, on
7any public utility services rendered by the person or
8company, on any privilege or transaction involving the
9rendering of the public utility service or on any Federal
10Energy Regulation Commission-approved qualifying facility.

11(2) Any of the following:

12(i) Goods and articles manufactured in the school
13district.

14(ii) The by-products of manufacture.

15(iii) Minerals, timber, natural resources and farm
16products produced in the school district.

17(iv) The preparation or processing of items under
18subparagraph (iii) for use or market.

19(v) Any privilege, act or transaction related to the
20business of manufacturing, the production, preparation or
21processing of minerals, timber and natural resources or
22farm products, by manufacturers, by producers and by
23farmers with respect to the goods, articles and products
24of their own manufacture, production or growth.

25(vi) Any privilege, act or transaction relating to
26the business of processing by-products of manufacture.

27(vii) The transportation, loading, unloading or
28dumping or storage of goods, articles, products or by-
29products under this paragraph, except that school
30districts may levy, assess and collect taxes on a person

1using municipal services and the personal income of
2natural persons engaged in these activities whether doing
3business as an individual proprietorship or as members of
4partnerships or other associations.

5(3) Gross receipts or part of gross receipts which are:

6(i) Discounts allowed to purchasers as cash
7discounts for prompt payment of their bills.

8(ii) Charges advanced by a seller for freight,
9delivery or other transportation for the purchaser in
10accordance with the terms of a contract of sale.

11(iii) Received upon the sale of an article of
12personal property which was acquired by the seller as a
13trade-in to the extent that the gross receipts in the
14sale of the article taken in trade does not exceed the
15amount of trade-in allowance made in acquiring the
16article.

17(iv) Refunds, credits or allowances given to a
18purchaser on account of defects in goods sold or
19merchandise returned.

20(v) Pennsylvania sales tax and any sales tax, use
21tax and occupancy tax imposed under law.

22(vi) Based on the value of exchanges or transfers
23between one seller and another seller who transfers
24property with the understanding that property of an
25identical description will be returned at a subsequent
26date, except that if sellers engaged in similar lines of
27business exchange property and one of them makes payment
28to the other in addition to the property exchanged, the
29additional payment received may be included in the gross
30receipts of the seller receiving such additional cash

1payments.

2(vii) Receipts of sellers from sales to other
3sellers in the same line where the seller transfers the
4title or possession at the same price for which the
5seller acquired the merchandise.

6(viii) Transfers between one department, branch or
7division of a corporation or other business entity of
8goods, wares and merchandise to another department,
9branch or division of the same corporation or business
10entity and which are recorded on the books to reflect
11such interdepartmental transactions.

12(ix) Transfers attributable to activities occurring
13outside the taxing authority. Gross receipts shall be
14attributed to the jurisdiction in which the activities
15generating the receipts occur.

16(4) The gross receipts of:

17(i) Any bank, bank and trust company, private bank,
18savings bank or trust company, as defined in the act of
19November 30, 1965 (P.L.847, No.356), known as the Banking
20Code of 1965.

21(ii) Any other institution or entity subject to the
22supervision of the Department of Banking under section
23201 of the act of May 15, 1933 (P.L.565, No.111), known
24as the Department of Banking Code.

25(iii) Any national bank.

26(iv) Any similar institution or entity established
27pursuant to Federal law or the law of any state.

28(5) The gross receipts of any distributor or importing
29distributor of malt or brewed beverages subject to licensure
30under the act of April 12, 1951 (P.L.90, No.21), known as the

1Liquor Code.

2(6) The gross premiums of any insurance company
3authorized to do business in this Commonwealth.

4Section 4. The amendment or addition of sections 501, 502(c)
5and 512 of the act shall apply to taxable years beginning after
6the effective date of this section.

<-7Section 5. This act shall take effect in 180 days.

<-8Section 5. This act shall take effect as follows:

9(1) This section shall take effect immediately.

10(2) The addition of Chapter 6 of the act shall take
11effect in 60 days.

12(3) The remainder of this act shall take effect in 180
13days.