PRINTER'S NO. 947
No. 840 Session of 1977
INTRODUCED BY THOMAS, MORRIS, PANCOAST, PITTS, ANDERSON, CIMINI,
GRIECO, RENWICK, KUSSE, W. D. HUTCHINSON, E. Z. TAYLOR,
DeVERTER, HELFRICK, WAGNER, STUBAN, WEIDNER, ZEARFOSS AND
ZELLER, MARCH 30, 1977
REFERRED TO COMMITTEE ON FINANCE, MARCH 30, 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
1 section 2, act of December 31, 1965 (P.L.1257, No.511), known as
2 "The Local Tax Enabling Act," the introductory paragraph amended
3 December 13, 1974 (P.L.941, No.310), are amended and the section
4 is amended by adding a clause to read:
5 Section 2. Delegation of Taxing Powers and Restrictions
6 Thereon.--The duly constituted authorities of the following
7 political subdivisions, cities of the second class, cities of
8 the second class A, cities of the third class, boroughs, towns,
9 townships of the first class, townships of the second class,
10 school districts of the second class, school districts of the
11 third class, and school districts of the fourth class, in all
12 cases including independent school districts, may, in their
13 discretion, by ordinance or resolution, for general revenue
14 purposes, levy, assess and collect or provide for the levying,
15 assessment and collection of such taxes as they shall determine
16 on persons, transactions, occupations, privileges, subjects and
17 personal property within the limits of such political
18 subdivisions, and upon the transfer of real property, or of any
19 interest in real property, situate within the political
20 subdivision levying and assessing the tax, regardless of where
21 the instruments making the transfers are made, executed or
22 delivered or where the actual settlements on such transfer take
23 place. The taxing authority may provide that the transferee
24 shall remain liable for any unpaid realty transfer taxes imposed
25 by virtue of this act. Each local taxing authority may, by
26 ordinance or resolution, exempt any person whose total income
27 from all sources is less than three thousand two hundred dollars
28 ($3,200) per annum from the per capita or similar head tax,
29 occupation tax and [occupational privilege] any earned income or
30 municipal services tax, or any portion thereof, in accordance
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1 with Article VIII, section 2(b)(ii) of the Constitution of the
2 Commonwealth of Pennsylvania and may adopt regulations for the
3 processing of claims for exemptions. Such local authorities
4 shall not have authority by virtue of this act:
5 * * *
6 (9) To levy, assess or collect any tax on individuals for
7 the privilege of engaging in an occupation (occupational
8 privilege tax) except that [such] a municipal services tax may
9 be levied, assessed and collected but only by the [political
10 subdivision] city, borough, town or township of the taxpayer's
11 place of employment.
12 Payment of any [occupational privilege] municipal services
13 tax to any [political subdivision] city, borough, town or
14 township by any person pursuant to an ordinance or resolution
15 passed or adopted under the authority of this act shall be
16 limited to ten dollars ($10) on each person for each calendar
17 year.
18 The situs of [such] the municipal services tax shall be the
19 place of employment, but, in the event a person is engaged in
20 more than one occupation, or an occupation which requires his
21 working in more than one political subdivision during the
22 calendar year, the priority of claim to collect such
23 [occupational privilege] municipal services tax shall be in the
24 following order: first, the [political subdivision] city,
25 borough, town or township in which a person maintains his
26 principal office or is principally employed; second, the
27 [political subdivision] city, borough, town or township in which
28 the person resides and works, if such a tax is levied by that
29 [political subdivision] city, borough, town or township; third,
30 the [political subdivision] city, borough, town or township in
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1 which a person is employed and which imposes the tax nearest in
2 miles to the person's home. The place of employment shall be
3 determined as of the day the taxpayer first becomes subject to
4 the tax during the calendar year.
5 It is the intent of this provision that no person shall pay
6 more than ten dollars ($10) in any calendar year as [an
7 occupational privilege] a municipal services tax irrespective of
8 the number of [political subdivisions] cities, boroughs, towns
9 or townships within which such person may be employed within any
10 given calendar year.
11 In case of dispute, a tax receipt of the taxing authority for
12 that calendar year declaring that the taxpayer has made prior
13 payment which constitutes prima facie certification of payment
14 to all other [political subdivisions] cities, boroughs, towns or
15 townships.
16 * * *
17 (11) To levy, assess or collect any tax on occupations using
18 a millage or percentage of any value or any arbitrary value
19 placed on various occupations as a basis for such tax.
20 Section 2. Clauses (3) and (8) of the first paragraph, and
21 the last paragraph of section 8 of the act, the last paragraph
22 added December 27, 1967 (P.L.894, No.404), are amended to read:
23 Section 8. Limitations on Rates of Specific Taxes.--No taxes
24 levied under the provisions of this act shall be levied by any
25 political subdivision on the following subjects exceeding the
26 rates specified in this section:
27 * * *
28 [(3) On wages, salaries, commissions and other earned income
29 of individuals, one percent.]
30 * * *
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1 (8) [Occupational privilege] Municipal service taxes, ten
2 dollars ($10).
3 * * *
4 [Notwithstanding the provisions of this section, any city of
5 the second class A may enact a tax upon wages, salaries,
6 commissions and other earned income of individuals resident
7 therein, not exceeding one percent, even though a school
8 district levies a similar tax on the same person provided that
9 the aggregate of both taxes does not exceed two percent.]
10 Section 3. Section 10 of the act is amended by adding a
11 subsection to read:
12 Section 10. Collection of Taxes.--* * *
13 (c) Variable Tax Rates.--In the event this act causes
14 variable rates of taxation within the jurisdiction of a single
15 tax collector or joint tax collecting bureau, such tax collector
16 or chief bureau administrative officer shall establish by rule
17 or regulation:
18 (1) A uniform withholding rate for all persons subject to
19 such tax collecting jurisdiction, which shall be the lowest
20 common rate assessed by all taxing jurisdictions covered
21 thereby.
22 (2) A procedure for collecting additional sums due from
23 persons subject to higher tax rates through estimated tax
24 filings or such year-end procedures as may be deemed necessary
25 and reasonable.
26 Section 4. Paragraphs (a) and (b) of division IV of section
27 13 of the act are amended to read:
28 Section 13. Earned Income Taxes.--On and after the effective
29 date of this act the remaining provisions of this section shall
30 be included in or construed to be a part of each tax levied and
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1 assessed upon earned income by any political subdivision levying
2 and assessing such tax pursuant to this act. The definitions
3 contained in this section shall be exclusive for any tax upon
4 earned income and net profits levied and assessed pursuant to
5 this act, and shall not be altered or changed by any political
6 subdivision levying and assessing such tax.
7 * * *
8 IV. Collection at Source
9 (a) Every employer having an office, factory, workshop,
10 branch, warehouse, or other place of business within the taxing
11 jurisdiction imposing a tax on earned income or net profits
12 within the taxing district who employs one or more persons,
13 other than domestic servants, for a salary, wage, commission or
14 other compensation, and any department or agency of the
15 Commonwealth as an employer of any resident of a taxing
16 jurisdiction subject to such tax, who has not previously
17 registered, shall, within fifteen days after becoming an
18 employer, register with the officer his name and address and
19 such other information as the officer may require.
20 (b) Every employer having an office, factory, workshop,
21 branch, warehouse, or other place of business within the taxing
22 jurisdiction imposing a tax on earned income or net profits
23 within the taxing district who employs one or more persons,
24 other than domestic servants, for a salary, wage, commission, or
25 other compensation, and any department or agency of the
26 Commonwealth as an employer of any resident of a taxing
27 jurisdiction subject to such tax, shall deduct at the time of
28 payment thereof, the tax imposed by ordinance or resolution on
29 the earned income due to his employe or employes, and shall, on
30 or before April 30, of the current year, July 31, of the current
19770H0840B0947 - 6 -
1 year, October 31, of the current year, and January 31, of the
2 succeeding year, file a return and pay to the officer the amount
3 of taxes deducted during the preceding three-month periods
4 ending March 31, of the current year, June 30, of the current
5 year, September 30, of the current year, and December 31, of the
6 current year, respectively. Such return unless otherwise agreed
7 upon between the officer and employer shall show the name and
8 social security number of each such employe, the earned income
9 of such employe during such preceding three-month period, the
10 tax deducted therefrom, the political subdivisions imposing the
11 tax upon such employe, the total earned income of all such
12 employes during such preceding three-month period, and the total
13 tax deducted therefrom and paid with the return.
14 Any employer who for two of the preceding four quarterly
15 periods has failed to deduct the proper tax, or any part
16 thereof, or has failed to pay over the proper amount of tax to
17 the taxing authority, may be required by the officer to file his
18 return and pay the tax monthly. In such cases, payments of tax
19 shall be made to the officer on or before the last day of the
20 month succeeding the month for which the tax was withheld.
21 * * *
22 Section 5. The act is amended by adding a section to read:
23 Section 17.1. (a) During the first calendar or fiscal year
24 for which the local earned income tax rate limitations are
25 removed, only those political subdivisions required to abolish
26 one or more taxes as herein provided shall be allowed to raise
27 or enact its earned income tax to recover the revenue lost by
28 the abolition of such taxes, but the estimate of collections
29 shall not exceed one hundred ten percent of those lost revenues.
30 (b) During the second and each subsequent calendar or fiscal
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1 year for which local earned income tax rate limitations are
2 removed, any political subdivision may raise the rate of its
3 earned income tax provided that such political subdivision
4 simultaneously reduces its real property tax millage rate to
5 reflect an amount equal to at least eighty-five percent of the
6 estimated increase in collections attributable to the increased
7 earned income tax rate. Any time the real property millage rate
8 is lowered pursuant to this subsection such rate shall not be
9 thereafter raised for a period of two years and shall not again
10 equal the former rate for a period of seven years unless the
11 political subdivision shall have submitted such tax rate for the
12 approval of the electorate in accordance with the procedures
13 provided by law for the approval of the incurring of
14 indebtedness by referendum.
15 (c) Any political subdivision newly enacting an earned
16 income tax shall be subject to a one percent limitation in the
17 initial year of collection with the rate sharing provision of
18 section 8 in full force and effect.
19 Section 6. No political subdivision shall newly enact any
20 tax being abolished by this act after June 30, 1977.
21 Section 7. (a) The following acts or parts of acts, their
22 amendments and supplements, are repealed insofar as they relate
23 to the levy, assessment and collection of occupation taxes
24 assessed on a percentage or millage basis:
25 Section 2531, act of June 23, 1931 (P.L.932, No.317),
26 reenacted June 28, 1951 (P.L.662, No.164), known as "The Third
27 Class City Code."
28 Section 1709, act of June 24, 1931 (P.L.1206, No.331),
29 reenacted May 27, 1949 (P.L.1955, No.569), known as "The First
30 Class Township Code."
19770H0840B0947 - 8 -
1 Section 905, act of May 1, 1933 (P.L.103, No.69), reenacted
2 July 10, 1947 (P.L.1481, No.567), known as "The Second Class
3 Township Code."
4 Sections 20, 20.1 and 21, act of May 25, 1945 (P.L.1050,
5 No.394), known as the "Local Tax Collection Law."
6 Sections 655, 656, 674, 675, 676 and 677, act of March 10,
7 1949 (P.L.30, No.14), known as the "Public School Code of 1949."
8 The act of August 9, 1963 (P.L.640, No.338), entitled "An act
9 empowering cities of the first class, coterminous with school
10 districts of the first class, to authorize the boards of public
11 education of such school districts to impose certain additional
12 taxes for school district purposes, and providing for the levy,
13 assessment and collection of such taxes."
14 Section 1302, act of February 1, 1966 (1965 P.L.1656,
15 No.581), known as "The Borough Code."
16 (b) All acts and parts of acts are repealed insofar as they
17 are inconsistent herewith.
18 Section 8. The provisions of section 5 shall take effect
19 immediately and the remainder of this act shall take effect
20 January 1, 1978 for political subdivisions operating on a
21 calendar year basis, and on the first day of the fiscal year
22 beginning in the calendar year 1977 for political subdivisions
23 operating on a fiscal year basis.
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