PRINTER'S NO. 816
No. 753 Session of 1993
INTRODUCED BY FUMO, SCHWARTZ, JONES, FATTAH AND LYNCH,
MARCH 26, 1993
REFERRED TO APPROPRIATIONS, MARCH 26, 1993
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," requiring all employers to withhold wage taxes
11 levied by cities of the first class.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. Section 359 of the act of March 4, 1971 (P.L.6,
15 No.2), known as the Tax Reform Code of 1971, amended December
16 21, 1977 (P.L.330, No.98), is amended to read:
17 Section 359. Saving Clause and Limitations.--(a)
18 Notwithstanding anything contained in any law to the contrary,
19 including but not limited to the provisions of the act of August
20 5, 1932 (Sp.Sess., P.L.45, No.45), referred to as the Sterling
21 Act, the validity of any ordinance or part of any ordinance or
22 any resolution or part of any resolution, and any amendments or
1 supplements thereto now or hereafter enacted or adopted by any
2 political subdivision of this Commonwealth for or relating to
3 the imposition, levy or collection of any tax, shall not be
4 affected or impaired by anything contained in this article,
5 except as hereinafter provided in subsection (b) of this
6 section.
7 (b) (1) Notwithstanding the provisions of subsection (a) of
8 this section to the contrary, any rate of tax imposed by
9 ordinance of a city of the first class pursuant to the above
10 cited Sterling Act on salaries, wages, commissions, compensation
11 or other income received or to be received for work done or
12 services performed within such city by persons who are not legal
13 residents of such city, shall not, except as hereinafter
14 provided, exceed the tax imposition rate of four and five-
15 sixteenths per cent for the tax year 1977 or for any tax year
16 thereafter.
17 (2) In the event such city by ordinance imposes a tax rate
18 on residents or nonresidents in excess of the aforesaid tax rate
19 on the income categories enumerated herein, the provisions of
20 the ordinance imposing such tax rate increase on income of
21 persons who are legal residents of such city, shall be deemed
22 valid and legally effective within the meaning and application
23 of subsection (a) herein. But the provisions of such ordinance
24 imposing a tax rate in excess of four and five-sixteenths per
25 cent with respect to persons who are not legal residents of such
26 city shall be deemed suspended and without any validity to the
27 extent that such tax rate exceeds the tax rate of four and five-
28 sixteenths per cent on income of such nonresidents. And, such
29 excess tax rate provisions shall remain suspended and without
30 any validity until such date as the city of the first class, by
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1 ordinance, imposes a rate of tax on income of both legal
2 residents or nonresidents of such city in excess of the tax rate
3 imposition of five and three-fourths per cent per year. In such
4 case the Legislature hereby declares such suspension to be
5 removed and the tax rate valid as to nonresidents, provided,
6 however, that such suspension is removed and the rate deemed
7 valid only to the extent the tax rate imposed on income of such
8 nonresidents does not exceed seventy-five per cent of the tax
9 rate imposed by ordinance per year on the income of legal
10 residents of such city. It is the intention of the Legislature
11 by this subsection to impose certain terms and conditions with
12 respect to the validity and legal effectiveness of the Sterling
13 Act or of any ordinance of the city of the first class enacted
14 pursuant thereto which imposes a tax on the income of
15 nonresidents of such city.
16 (3) Notwithstanding the suspension provisions set forth
17 heretofore, each city of the first class which imposes a tax
18 pursuant to the above cited Sterling Act shall, by ordinance
19 direct every employer maintaining an office or transacting
20 business within such city and making payment of compensation (i)
21 to a resident individual, or (ii) to a nonresident individual
22 taxpayer performing services on behalf of such employer within
23 such city, shall deduct and withhold from such compensation for
24 each payroll period a tax computed in such manner as to result,
25 so far as practicable, in withholding from the employe's
26 compensation during each calendar year an amount substantially
27 equivalent to the tax reasonably estimated to be due for such
28 year with respect to such compensation. The method of
29 determining the amount to be withheld shall be to withhold the
30 highest amount of tax imposed with provision in such ordinance
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1 to provide refunds of the excess tax withheld to qualified
2 nonresident taxpayers within four months of the end of each
3 calendar year.
4 (4) In the event that all or any part of the provisions of
5 subsection (b) of this section are declared by a court to be
6 unconstitutional, it shall be the duty of the court to construe
7 the remaining amendatory provisions to Article III in accordance
8 with section 358.
9 (c) (1) Every employer having a place of business within
10 this Commonwealth who employs one or more persons who are
11 residents of a city of the first class shall, within thirty days
12 after becoming such an employer, register with the revenue
13 commissioner of a city of the first class the employer's name
14 and address and such other information as the revenue
15 commissioner may require.
16 (2) Every employer having a place of business within this
17 Commonwealth who employs one or more persons who are residents
18 of a city of the first class shall deduct from the salary,
19 wages, commissions or compensation due that person, at the time
20 of payment thereof, the tax imposed by the city of the first
21 class on any salary, wage, commission or other compensation due
22 that employe.
23 (3) Every employer employing one or more persons who are
24 residents of a city of the first class who pay any tax imposed
25 under this article shall file a return and pay to the revenue
26 commissioner the amount of taxes deducted as provided under the
27 Sterling Act. The return shall be on a form or forms furnished
28 by the revenue commissioner, and shall set forth the names and
29 residences of each employe of that employer during all or any
30 part of the period covered by the return, the amounts of
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1 salaries, wages, commissions or other compensation earned during
2 such period by each employe, together with such other
3 information as the revenue commissioner may require.
4 (4) The employer shall remit the return and the total tax
5 deducted in accordance with time frames established by
6 regulations promulgated by the revenue commissioner of a city of
7 the first class.
8 (5) Annually, on or before the twenty-eighth day of
9 February, every employer who has filed returns of tax withheld
10 and remitted the tax through the year, shall be required to file
11 an Employer's Annual Reconciliation of Wage Tax Withheld, along
12 with a copy of Form W-2 of the Internal Revenue Service for each
13 employee, other listings or electronic data processing tapes,
14 setting forth the following information: (i) name and address
15 of employer; (ii) employer's Federal identification number;
16 (iii) full name and residence address of each employee; (iv)
17 employee's social security number; (v) total wages paid during
18 the year before any deductions; and (vi) employer's city
19 account number.
20 (6) If an employer fails to deduct and withhold tax as
21 prescribed in this subsection, it shall not relieve the employee
22 from payment of such tax where payment cannot, for any reason,
23 be obtained from the employer.
24 Section 2. This act shall take effect immediately.
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