PRINTER'S NO. 1615
No. 1359 Session of 1977
INTRODUCED BY THOMAS, MORRIS, PANCOAST, ANDERSON, DeVERTER,
KUSSE, HELFRICK AND RENWICK, JUNE 20, 1977
REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, JUNE 20, 1977
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 further providing for exemptions and municipal services
23 taxes, changing the rate limitation on wage or income taxes
24 and further providing for collection at source of wage or
25 income taxes and repealing occupation taxes based on a
26 percentage or millage basis and making an editorial change.
27 The General Assembly of the Commonwealth of Pennsylvania
28 hereby enacts as follows:
29 Section 1. The introductory paragraph and clause (9) of
30 section 2, act of December 31, 1965 (P.L.1257, No.511), known as
1 "The Local Tax Enabling Act," the introductory paragraph amended
2 December 13, 1974 (P.L.941, No.310), are amended to read:
3 Section 2. Delegation of Taxing Powers and Restrictions
4 Thereon.--The duly constituted authorities of the following
5 political subdivisions, cities of the second class, cities of
6 the second class A, cities of the third class, boroughs, towns,
7 townships of the first class, townships of the second class,
8 school districts of the second class, school districts of the
9 third class, and school districts of the fourth class, in all
10 cases including independent school districts, may, in their
11 discretion, by ordinance or resolution, for general revenue
12 purposes, levy, assess and collect or provide for the levying,
13 assessment and collection of such taxes as they shall determine
14 on persons, transactions, occupations, privileges, subjects and
15 personal property within the limits of such political
16 subdivisions, and upon the transfer of real property, or of any
17 interest in real property, situate within the political
18 subdivision levying and assessing the tax, regardless of where
19 the instruments making the transfers are made, executed or
20 delivered or where the actual settlements on such transfer take
21 place. The taxing authority may provide that the transferee
22 shall remain liable for any unpaid realty transfer taxes imposed
23 by virtue of this act. Each local taxing authority may, by
24 ordinance or resolution, exempt any person whose total income
25 from all sources is less than three thousand two hundred dollars
26 ($3,200) per annum from the per capita or similar head tax,
27 occupation tax and [occupational privilege] any earned income or
28 municipal services tax, or any portion thereof, in accordance
29 with Article VIII, section 2(b)(ii) of the Constitution of the
30 Commonwealth of Pennsylvania and may adopt regulations for the
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1 processing of claims for exemptions. Such local authorities
2 shall not have authority by virtue of this act:
3 * * *
4 (9) To levy, assess or collect any tax on individuals for
5 the privilege of engaging in an occupation (occupational
6 privilege tax) except that [such] a municipal services tax may
7 be levied, assessed and collected but only by the [political
8 subdivision] city, borough, town or township of the taxpayer's
9 place of employment.
10 Payment of any [occupational privilege] municipal services
11 tax to any [political subdivision] city, borough, town or
12 township by any person pursuant to an ordinance or resolution
13 passed or adopted under the authority of this act shall be
14 limited to ten dollars ($10) on each person for each calendar
15 year.
16 The situs of [such] the municipal services tax shall be the
17 place of employment, but, in the event a person is engaged in
18 more than one occupation, or an occupation which requires his
19 working in more than one political subdivision during the
20 calendar year, the priority of claim to collect such
21 [occupational privilege] municipal services tax shall be in the
22 following order: first, the [political subdivision] city,
23 borough, town or township in which a person maintains his
24 principal office or is principally employed; second, the
25 [political subdivision] city, borough, town or township in which
26 the person resides and works, if such a tax is levied by that
27 [political subdivision] city, borough, town or township; third,
28 the [political subdivision] city, borough, town or township in
29 which a person is employed and which imposes the tax nearest in
30 miles to the person's home. The place of employment shall be
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1 determined as of the day the taxpayer first becomes subject to
2 the tax during the calendar year.
3 It is the intent of this provision that no person shall pay
4 more than ten dollars ($10) in any calendar year as [an
5 occupational privilege] a municipal services tax irrespective of
6 the number of [political subdivisions] cities, boroughs, towns
7 or townships within which such person may be employed within any
8 given calendar year.
9 In case of dispute, a tax receipt of the taxing authority for
10 that calendar year declaring that the taxpayer has made prior
11 payment which constitutes prima facie certification of payment
12 to all other [political subdivisions] cities, boroughs, towns or
13 townships.
14 * * *
15 Section 2. Clauses (3) and (8) of the first paragraph, and
16 the last paragraph of section 8 of the act, the last paragraph
17 added December 27, 1967 (P.L.894, No.404), are amended to read:
18 Section 8. Limitations on Rates of Specific Taxes.--No taxes
19 levied under the provisions of this act shall be levied by any
20 political subdivision on the following subjects exceeding the
21 rates specified in this section:
22 * * *
23 [(3) On wages, salaries, commissions and other earned income
24 of individuals, one percent.]
25 * * *
26 (8) [Occupational privilege] Municipal service taxes, ten
27 dollars ($10).
28 * * *
29 [Notwithstanding the provisions of this section, any city of
30 the second class A may enact a tax upon wages, salaries,
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1 commissions and other earned income of individuals resident
2 therein, not exceeding one percent, even though a school
3 district levies a similar tax on the same person provided that
4 the aggregate of both taxes does not exceed two percent.]
5 Section 3. Section 10 of the act is amended by adding a
6 subsection to read:
7 Section 10. Collection of Taxes.--* * *
8 (c) Variable Tax Rates.--In the event this act causes
9 variable rates of taxation within the jurisdiction of a single
10 tax collector or joint tax collecting bureau, such tax collector
11 or chief bureau administrative officer shall establish by rule
12 or regulation:
13 (1) A uniform withholding rate for all persons subject to
14 such tax collecting jurisdiction, which shall be the lowest
15 common rate assessed by all taxing jurisdictions covered
16 thereby.
17 (2) A procedure for collecting additional sums due from
18 persons subject to higher tax rates through estimated tax
19 filings or such year-end procedures as may be deemed necessary
20 and reasonable.
21 Section 4. Paragraphs (a) and (b) of division IV of section
22 13 of the act are amended to read:
23 Section 13. Earned Income Taxes.--On and after the effective
24 date of this act the remaining provisions of this section shall
25 be included in or construed to be a part of each tax levied and
26 assessed upon earned income by any political subdivision levying
27 and assessing such tax pursuant to this act. The definitions
28 contained in this section shall be exclusive for any tax upon
29 earned income and net profits levied and assessed pursuant to
30 this act, and shall not be altered or changed by any political
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1 subdivision levying and assessing such tax.
2 * * *
3 IV. Collection at Source
4 (a) Every employer having an office, factory, workshop,
5 branch, warehouse, or other place of business within the taxing
6 jurisdiction imposing a tax on earned income or net profits
7 within the taxing district who employs one or more persons,
8 other than domestic servants, for a salary, wage, commission or
9 other compensation, and any department or agency of the
10 Commonwealth as an employer of any resident of a taxing
11 jurisdiction subject to such tax, who has not previously
12 registered, shall, within fifteen days after becoming an
13 employer, register with the officer his name and address and
14 such other information as the officer may require.
15 (b) Every employer having an office, factory, workshop,
16 branch, warehouse, or other place of business within the taxing
17 jurisdiction imposing a tax on earned income or net profits
18 within the taxing district who employs one or more persons,
19 other than domestic servants, for a salary, wage, commission, or
20 other compensation, and any department or agency of the
21 Commonwealth as an employer of any resident of a taxing
22 jurisdiction subject to such tax, shall deduct at the time of
23 payment thereof, the tax imposed by ordinance or resolution on
24 the earned income due to his employe or employes, and shall, on
25 or before April 30, of the current year, July 31, of the current
26 year, October 31, of the current year, and January 31, of the
27 succeeding year, file a return and pay to the officer the amount
28 of taxes deducted during the preceding three-month periods
29 ending March 31, of the current year, June 30, of the current
30 year, September 30, of the current year, and December 31, of the
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1 current year, respectively. Such return unless otherwise agreed
2 upon between the officer and employer shall show the name and
3 social security number of each such employe, the earned income
4 of such employe during such preceding three-month period, the
5 tax deducted therefrom, the political subdivisions imposing the
6 tax upon such employe, the total earned income of all such
7 employes during such preceding three-month period, and the total
8 tax deducted therefrom and paid with the return.
9 Any employer who for two of the preceding four quarterly
10 periods has failed to deduct the proper tax, or any part
11 thereof, or has failed to pay over the proper amount of tax to
12 the taxing authority, may be required by the officer to file his
13 return and pay the tax monthly. In such cases, payments of tax
14 shall be made to the officer on or before the last day of the
15 month succeeding the month for which the tax was withheld.
16 * * *
17 Section 5. The act is amended by adding a section to read:
18 Section 17.1. Limitations.--(a) Increase in earned income
19 tax.--During the first and each subsequent calendar or fiscal
20 year for which local earned income tax rate limitations are
21 removed, any political subdivision may raise the rate of its
22 earned income tax provided that such political subdivision
23 simultaneously reduces or eliminates another tax or taxes so
24 that the total of all other taxes collected by the taxing
25 district are reduced by at least ninety percent of the estimated
26 increase in collection attributable to the increased earned
27 income tax rate. Any time any tax rate is lowered pursuant to
28 this subsection such rate shall not be thereafter raised for a
29 period of two years and shall not again equal the former rate
30 for a period of seven years unless the political subdivision
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1 shall have submitted such tax rate for the approval of the
2 electorate in accordance with the procedures provided by law for
3 the approval of the incurring of indebtedness by referendum.
4 (b) First year limit.--Any political subdivision newly
5 enacting an earned income tax shall be subject to a one percent
6 limitation in the initial year of collection with the rate
7 sharing provision of section 8 in full force and effect.
8 Section 6. The provisions of section 5 shall take effect
9 immediately and the remainder of this act shall take effect
10 January 1, 1978 for political subdivisions operating on a
11 calendar year basis, and on the first day of the fiscal year
12 beginning in the calendar year 1977 for political subdivisions
13 operating on a fiscal year basis.
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