PRINTER'S NO. 731
No. 671 Session of 1987
INTRODUCED BY RUDY, SHOWERS, NOYE, COLE, WASS, COY, COHEN,
KUKOVICH, MOWERY, HERMAN, BUNT, RITTER, BUSH, WOZNIAK, REBER,
GRUPPO, MORRIS, CAWLEY, JOHNSON, PHILLIPS, DISTLER,
DOMBROWSKI, PRESTON, MERRY AND ANGSTADT, MARCH 9, 1987
REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, MARCH 9, 1987
AN ACT
1 Amending the act of December 31, 1965 (P.L.1257, No.511),
2 entitled "An act empowering cities of the second class,
3 cities of the second class A, cities of the third class,
4 boroughs, towns, townships of the first class, townships of
5 the second class, school districts of the second class,
6 school districts of the third class and school districts of
7 the fourth class including independent school districts, to
8 levy, assess, collect or to provide for the levying,
9 assessment and collection of certain taxes subject to maximum
10 limitations for general revenue purposes; authorizing the
11 establishment of bureaus and the appointment and compensation
12 of officers, agencies and employes to assess and collect such
13 taxes; providing for joint collection of certain taxes,
14 prescribing certain definitions and other provisions for
15 taxes levied and assessed upon earned income, providing for
16 annual audits and for collection of delinquent taxes, and
17 permitting and requiring penalties to be imposed and
18 enforced, including penalties for disclosure of confidential
19 information, providing an appeal from the ordinance or
20 resolution levying such taxes to the court of quarter
21 sessions and to the Supreme Court and Superior Court,"
22 repealing occupation taxes based on a percentage or millage
23 basis; repealing per capita taxes; making repeals; and making
24 editorial changes.
25 The General Assembly of the Commonwealth of Pennsylvania
26 hereby enacts as follows:
27 Section 1. The introductory paragraph and clauses (4) and
28 (10) of section 2 of the act of December 31, 1965 (P.L.1257,
1 No.511), known as The Local Tax Enabling Act, amended October
2 11, 1984 (P.L.885, No.172), are amended and the section is
3 amended by adding clauses to read:
4 Section 2. Delegation of Taxing Powers and Restrictions
5 Thereon.--The duly constituted authorities of the following
6 political subdivisions, cities of the second class, cities of
7 the second class A, cities of the third class, boroughs, towns,
8 townships of the first class, townships of the second class,
9 school districts of the second class, school districts of the
10 third class, and school districts of the fourth class, in all
11 cases including independent school districts, may, in their
12 discretion, by ordinance or resolution, for general revenue
13 purposes, levy, assess and collect or provide for the levying,
14 assessment and collection of such taxes as they shall determine
15 on persons, transactions, occupations, privileges, subjects and
16 personal property within the limits of such political
17 subdivisions, and upon the transfer of real property, or of any
18 interest in real property, situate within the political
19 subdivision levying and assessing the tax, regardless of where
20 the instruments making the transfers are made, executed or
21 delivered or where the actual settlements on such transfer take
22 place. The taxing authority may provide that the transferee
23 shall remain liable for any unpaid realty transfer taxes imposed
24 by virtue of this act. Each local taxing authority may, by
25 ordinance or resolution, exempt any person whose total income
26 from all sources is less than five thousand dollars ($5,000) per
27 annum from the [per capita or similar head tax, occupation tax]
28 and occupational privilege tax, or earned income tax, or any
29 portion thereof, and may adopt regulations for the processing of
30 claims for exemptions. Such local authorities shall not have
19870H0671B0731 - 2 -
1 authority by virtue of this act:
2 * * *
3 (4) To levy, assess and collect a tax on goods and articles
4 manufactured in such political subdivision or on the by-products
5 of manufacture, or on minerals, timber, natural resources and
6 farm products produced in such political subdivision or on the
7 preparation or processing thereof for use or market, or on any
8 privilege, act or transaction related to the business of
9 manufacturing, the production, preparation or processing of
10 minerals, timber and natural resources, or farm products, by
11 manufacturers, by producers and by farmers with respect to the
12 goods, articles and products of their own manufacture,
13 production or growth, or on any privilege, act or transaction
14 relating to the business of processing by-products of
15 manufacture, or on the transportation, loading, unloading or
16 dumping or storage of such goods, articles, products or by-
17 products; except that local authorities may levy, assess and
18 collect taxes on the [occupation,] occupational privilege, [per
19 capita] and earned income or net profits of natural persons
20 engaged in the above activities whether doing business as
21 individual proprietorship or as members of partnerships or other
22 associations;
23 * * *
24 [(10) To levy, assess or collect a tax on admissions to
25 motion picture theatres: Provided, That this limitation (10)
26 shall not apply to cities of the second class.]
27 * * *
28 (13) To levy, assess or collect any tax on occupations,
29 using a millage or percentage of any value, a flat rate or any
30 arbitrary value placed on various occupations as a basis for
19870H0671B0731 - 3 -
1 such tax.
2 (14) To levy, assess or collect any per capita or similar
3 head tax.
4 Section 2. Section 8 of the act, amended October 11, 1984
5 (P.L.885, No.172), is amended to read:
6 Section 8. Limitations on Rates of Specific Taxes.--No taxes
7 levied under the provisions of this act shall be levied by any
8 political subdivision on the following subjects exceeding the
9 rates specified in this section:
10 [(1) Per capita, poll or other similar head taxes, ten
11 dollars ($10).]
12 (2) On each dollar of the whole volume of business
13 transacted by wholesale dealers in goods, wares and merchandise,
14 one mill, by retail dealers in goods, wares and merchandise and
15 by proprietors of restaurants or other places where food, drink
16 and refreshments are served, one and one-half mills; except in
17 cities of the second class, where rates shall not exceed one
18 mill on wholesale dealers and two mills on retail dealers and
19 proprietors. No such tax shall be levied on the dollar volume of
20 business transacted by wholesale and retail dealers derived from
21 the resale of goods, wares and merchandise, taken by any dealer
22 as a trade-in or as part payment for other goods, wares and
23 merchandise, except to the extent that the resale price exceeds
24 the trade-in allowance.
25 (3) On wages, salaries, commissions and other earned income
26 of individuals, one percent for cities, boroughs, towns and
27 townships, and two percent for school districts of the second
28 class, school districts of the third class and school districts
29 of the fourth class, including independent school districts,
30 notwithstanding the general provisions of this section relative
19870H0671B0731 - 4 -
1 to rate sharing between political subdivisions.
2 (4) On retail sales involving the transfer of title or
3 possession of tangible personal property, two percent.
4 (5) On the transfer of real property, one percent.
5 (6) On admissions to places of amusement, athletic events
6 and the like, and on motion picture theatres in cities of the
7 second class, ten percent.
8 (7) Flat rate occupation taxes not using a millage or
9 percentage as a basis, ten dollars ($10).
10 (8) Occupational privilege taxes, ten dollars ($10).
11 (9) On admissions to ski facilities, ten percent. The tax
12 base upon which the tax shall be levied shall not exceed forty
13 percent of the cost of the lift ticket. The lift ticket shall
14 include all costs of admissions to the ski facility.
15 (10) On admissions to golf courses, ten percent. The tax
16 base upon which the tax shall be levied shall not exceed forty
17 percent of the greens fee. The greens fee shall include all
18 costs of admissions to the golf course.
19 Except as otherwise provided in this act, at any time two
20 political subdivisions shall impose any one of the above taxes
21 on the same person, subject, business, transaction or privilege,
22 located within both such political subdivisions, during the same
23 year or part of the same year, under the authority of this act
24 then the tax levied by a political subdivision under the
25 authority of this act shall, during the time such duplication of
26 the tax exists, except as hereinafter otherwise provided, be
27 one-half of the rate, as above limited, and such one-half rate
28 shall become effective by virtue of the requirements of this act
29 from the day such duplication becomes effective without any
30 action on the part of the political subdivision imposing the tax
19870H0671B0731 - 5 -
1 under the authority of this act. When any one of the above taxes
2 has been levied under the provisions of this act by one
3 political subdivision and a subsequent levy is made either for
4 the first time or is revived after a lapse of time by another
5 political subdivision on the same person, subject, business,
6 transaction or privilege at a rate that would make the combined
7 levies exceed the limit allowed by this subdivision, the tax of
8 the second political subdivision shall not become effective
9 until the end of the fiscal year for which the prior tax was
10 levied, unless:
11 (1) Notice indicating its intention to make such levy is
12 given to the first taxing body by the second taxing body as
13 follows: (i) when the notice is given to a school district it
14 shall be given at least forty-five days prior to the last day
15 fixed by law for the levy of its school taxes; (ii) when given
16 to any other political subdivision it shall be prior to the
17 first day of January immediately preceding, or if a last day for
18 the adoption of the budget is fixed by law, at least forty-five
19 days prior to such last day; or
20 (2) Unless the first taxing body shall indicate by
21 appropriate resolution its desire to waive notice requirements
22 in which case the levy of the second taxing body shall become
23 effective on such date as may be agreed upon by the two taxing
24 bodies.
25 It is the intent and purpose of this provision to limit rates
26 of taxes referred to in this section so that the entire burden
27 of one tax on a person, subject, business, transaction or
28 privilege shall not exceed the limitations prescribed in this
29 section: Provided, however, That any two political subdivisions
30 which impose any one of the above taxes, on the same person,
19870H0671B0731 - 6 -
1 subject, business, transaction or privilege during the same year
2 or part of the same year may agree among themselves that,
3 instead of limiting their respective rates to one-half of the
4 maximum rate herein provided, they will impose respectively
5 different rates, the total of which shall not exceed the maximum
6 rate as above permitted.
7 [Notwithstanding the provisions of this section, any city of
8 the second class A may enact a tax upon wages, salaries,
9 commissions and other earned income of individuals resident
10 therein, not exceeding one percent, even though a school
11 district levies a similar tax on the same person provided that
12 the aggregate of both taxes does not exceed two percent.]
13 Section 3. Section 17 of the act is amended to read:
14 Section 17. Tax Limitations.--(a) Over-all Limit of Tax
15 Revenues.--The aggregate amount of all taxes imposed by any
16 political subdivision under this section and in effect during
17 any fiscal year shall not exceed an amount equal to the product
18 obtained by multiplying the latest total market valuation of
19 real estate in such political subdivision, as determined by the
20 board for the assessment and revision of taxes or any similar
21 board established by the assessment laws which determines market
22 values of real estate within the political subdivision, by
23 [twelve] eighteen mills. In school districts of the second
24 class, third class and fourth class and in any political
25 subdivision within a county where no market values of real
26 estate have been determined by the board for the assessment and
27 revision of taxes, or any similar board, the aggregate amount of
28 all taxes imposed under this section and in effect during any
29 fiscal year shall not exceed an amount equal to the product
30 obtained by multiplying the latest total market valuation of
19870H0671B0731 - 7 -
1 real estate in such school district, or other political
2 subdivision, as certified by the State Tax Equalization Board,
3 by [twelve] eighteen mills. In school districts of the third and
4 fourth class, taxes imposed on sales involving the transfer of
5 real property shall not be included in computing the aggregate
6 amount of taxes for any fiscal year in which one hundred or more
7 new homes or other major improvements on real estate were
8 constructed in the school district.
9 The aggregate amount of all taxes imposed by any independent
10 school district under this section during any fiscal year shall
11 not exceed an amount equal to the product obtained by
12 multiplying the latest total valuation of real estate in such
13 district by [fifteen] eighteen mills.
14 (b) Reduction of Rates Where Taxes Exceed Limitations; Use
15 of Excess Moneys.--If, during any fiscal year, it shall appear
16 that the aggregate revenues from taxes levied and collected
17 under the authority of this act will materially exceed the
18 limitations imposed by this act, the political subdivision shall
19 forthwith reduce the rate or rates of such tax or taxes to stay
20 within such limitations as nearly as may be. Any one or more
21 persons liable for the payment of taxes levied and collected
22 under the authority of this act shall have the right to complain
23 to the court of common pleas of the county in an action of
24 mandamus to compel compliance with the preceding provision of
25 this subsection. Tax moneys levied and collected in any fiscal
26 year in excess of the limitations imposed by this act shall not
27 be expended during such year, but shall be deposited in a
28 separate account in the treasury of the political subdivision
29 for expenditure in the following fiscal year. The rates of taxes
30 imposed under this act for the following fiscal year shall be so
19870H0671B0731 - 8 -
1 fixed that the revenues thereby produced, together with the
2 excess tax moneys on deposit as aforesaid, shall not exceed the
3 limitations imposed by this act.
4 During the first and each subsequent calendar or fiscal year
5 for which local earned income tax rates are increased, any
6 political subdivision may raise the rate of its earned income
7 tax, provided that such political subdivision simultaneously
8 reduces or eliminates another tax or taxes so that the total of
9 all other taxes collected by the taxing district are reduced by
10 at least ninety percent of the estimated increase in collection
11 attributable to the increased earned income tax rate. Any time
12 any tax rate is lowered pursuant to this paragraph, such rate
13 shall not be thereafter raised for a period of two years and
14 shall not again equal the former rate for a period of seven
15 years unless the political subdivision shall have submitted such
16 tax rate for the approval of the electorate in accordance with
17 the procedures provided by law for the approval of the incurring
18 of indebtedness by referendum.
19 Section 4. Section 19 of the act, amended October 4, 1978
20 (P.L.930, No.177), is amended to read:
21 Section 19. Collection of Delinquent [Per Capita,
22 Occupation,] Occupational Privilege and Earned Income Taxes from
23 Employers, etc.--The tax collector shall demand, receive and
24 collect from all corporations, political subdivisions,
25 associations, companies, firms or individuals, employing persons
26 owing delinquent [per capita, or occupation,] occupational
27 privilege and earned income taxes, or whose spouse owes
28 delinquent [per capita, occupation,] occupational privilege and
29 earned income taxes, or having in possession unpaid commissions
30 or earnings belonging to any person or persons owing delinquent
19870H0671B0731 - 9 -
1 [per capita, occupation,] occupational privilege and earned
2 income taxes, or whose spouse owes delinquent [per capita,
3 occupation,] occupational privilege and earned income taxes,
4 upon the presentation of a written notice and demand certifying
5 that the information contained therein is true and correct and
6 containing the name of the taxable or the spouse thereof and the
7 amount of tax due. Upon the presentation of such written notice
8 and demand, it shall be the duty of any such corporation,
9 political subdivision, association, company, firm or individual
10 to deduct from the wages, commissions or earnings of such
11 individual employes, then owing or that shall within sixty days
12 thereafter become due, or from any unpaid commissions or
13 earnings of any such taxable in its or his possession, or that
14 shall within sixty days thereafter come into its or his
15 possession, a sum sufficient to pay the respective amount of the
16 delinquent [per capita, occupation,] occupational privilege and
17 earned income taxes and costs, shown upon the written notice or
18 demand, and to pay the same to the tax collector of the taxing
19 district in which such delinquent tax was levied within sixty
20 days after such notice shall have been given. No more than ten
21 percent of the wages, commissions or earnings of the delinquent
22 taxpayer or spouse thereof may be deducted at any one time for
23 delinquent [per capita, occupation,] occupational privilege and
24 earned income taxes and costs. Such corporation, political
25 subdivision, association, firm or individual shall be entitled
26 to deduct from the moneys collected from each employe the costs
27 incurred from the extra bookkeeping necessary to record such
28 transactions, not exceeding two percent of the amount of money
29 so collected and paid over to the tax collector. Upon the
30 failure of any such corporation, political subdivision,
19870H0671B0731 - 10 -
1 association, company, firm or individual to deduct the amount of
2 such taxes or to pay the same over to the tax collector, less
3 the cost of bookkeeping involved in such transaction, as herein
4 provided, within the time hereby required, such corporation,
5 political subdivision, association, company, firm or individual
6 shall forfeit and pay the amount of such tax for each such
7 taxable whose taxes are not withheld and paid over, or that are
8 withheld and not paid over together with a penalty of ten
9 percent added thereto, to be recovered by an action of assumpsit
10 in a suit to be instituted by the tax collector, or by the
11 proper authorities of the taxing district, as debts of like
12 amount are now by law recoverable, except that such person shall
13 not have the benefit of any stay of execution or exemption law.
14 The tax collector shall not proceed against a spouse or his
15 employer until he has pursued collection remedies against the
16 delinquent taxpayer and his employer under this section.
17 Section 5. Section 20 of the act is amended to read:
18 Section 20. Collection of Delinquent [Per Capita,
19 Occupation,] Occupational Privilege and Earned Income Taxes from
20 the Commonwealth.--Upon presentation of a written notice and
21 demand under oath or affirmation, to the State Treasurer or any
22 other fiscal officer of the State, or its boards, authorities,
23 agencies or commissions, it shall be the duty of the treasurer
24 or officer to deduct from the wages then owing, or that shall
25 within sixty days thereafter become due to any employe, a sum
26 sufficient to pay the respective amount of the delinquent [per
27 capita, occupation,] occupational privilege and earned income
28 taxes and costs shown on the written notice. The same shall be
29 paid to the tax collector of the taxing district in which said
30 delinquent tax was levied within sixty days after such notice
19870H0671B0731 - 11 -
1 shall have been given.
2 Section 6. During the first year after enactment of this
3 act, the credit added by section 14 of the act shall be
4 applicable only to residents of political subdivisions which
5 previously levied the earned income tax.
6 Section 7. (a) The following acts or parts of acts, their
7 amendments and supplements, are repealed insofar as they relate
8 to the levy, assessment and collection of per capita, residence
9 or occupation taxes:
10 Section 2531 of the act of June 23, 1931 (P.L.932, No.317),
11 known as The Third Class City Code.
12 Section 1709 of the act of June 24, 1931 (P.L.1206, No.331),
13 known as The First Class Township Code.
14 Act of June 26, 1931 (P.L.1379, No.348), entitled, as
15 amended, "An act creating in counties of the second A and third
16 class a board for the assessment and revision of taxes;
17 providing for the appointment of the members of such board by
18 the county commissioners; providing for their salaries, payable
19 by the county; abolishing existing boards; defining the powers
20 and duties of such board; regulating the assessment of persons,
21 property, and occupations for county, borough, town, township,
22 school, and poor purposes; authorizing the appointment of
23 subordinate assessors, a solicitor, engineers, and clerks;
24 providing for their compensation, payable by such counties;
25 abolishing the office of ward, borough, and township assessors,
26 so far as the making of assessments and valuations for taxation
27 is concerned; and providing for the acceptance of this act by
28 cities."
29 Section 905 of the act of May 1, 1933 (P.L.103, No.69), known
30 as The Second Class Township Code.
19870H0671B0731 - 12 -
1 Sections 201(b) and 202 and Articles IV and V of the act of
2 May 22, 1933 (P.L.853, No.155), known as The General County
3 Assessment Law.
4 Act of June 21, 1939 (P.L.626, No.294), entitled "An act
5 providing for and regulating the assessment and valuation of all
6 subjects of taxation in counties of the second class; creating
7 and prescribing the powers and duties of a Board of Property
8 Assessment, Appeals and Review; imposing duties on certain
9 county and city officers; abolishing the board for the
10 assessment and revision of taxes in such counties; and
11 prescribing penalties."
12 Sections 201(b) and 202(d) and Articles VI and VII of the act
13 of May 21, 1943 (P.L.571, No.254), known as The Fourth to Eighth
14 Class County Assessment Law.
15 Sections 20, 20.1 and 21 of the act of May 25, 1945
16 (P.L.1050, No.394), known as the Local Tax Collection Law.
17 Sections 675, 676, 677, 679 and 680 of the act of March 10,
18 1949 (P.L.30, No.14), known as the Public School Code of 1949.
19 Act of July 19, 1951 (P.L.1026, No.216), entitled, as
20 amended, "An act authorizing political subdivisions, other than
21 cities of the first and second classes and school districts of
22 the first class and first class A, to appoint and pay the
23 compensation of employes to make an assessment list of all
24 inhabitants or residents thereof over eighteen years of age, for
25 taxation purposes."
26 Section 1970 of the act of July 28, 1953 (P.L.723, No.230),
27 known as the Second Class County Code.
28 Section 1770 of the act of August 9, 1955 (P.L.323, No.130),
29 known as The County Code.
30 Section 1302 of the act of February 1, 1966 (1965 P.L.1656,
19870H0671B0731 - 13 -
1 No.581), known as The Borough Code.
2 (b) All other acts and parts of acts are repealed insofar as
3 they are inconsistent with this act.
4 Section 8. This act shall take effect as follows:
5 (1) January 1, 1988, for political subdivisions
6 operating on a calendar year basis.
7 (2) The first day of the fiscal year beginning in the
8 calendar year 1988 for political subdivisions operating on a
9 fiscal year basis.
A28L53WMB/19870H0671B0731 - 14 -