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                                                      PRINTER'S NO. 1805

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 1458 Session of 2007


        INTRODUCED BY MANN, DENLINGER, BOYD, CALTAGIRONE, CAPPELLI, COX,
           FABRIZIO, GEIST, GERGELY, GINGRICH, GRUCELA, HALUSKA,
           HARKINS, HENNESSEY, HERSHEY, KORTZ, NICKOL, RAYMOND, RUBLEY,
           SANTONI, SCAVELLO, SCHRODER, K. SMITH, STEIL AND STURLA,
           JUNE 5, 2007

        REFERRED TO COMMITTEE ON FINANCE, JUNE 5, 2007

                                     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 collection of taxes, for audits of
    23     earned income taxes, for earned income taxes, for suits for
    24     tax collection, for penalties and for delinquent tax
    25     collection costs.

    26     The General Assembly of the Commonwealth of Pennsylvania
    27  hereby enacts as follows:
    28     Section 1.  Section 10 of the act of December 31, 1965

     1  (P.L.1257, No.511), known as The Local Tax Enabling Act, amended
     2  November 30, 2004 (P.L.1520, No.192) and December 1, 2004
     3  (P.L.1729, No.222), is amended to read:
     4     Section 10.  Collection of Taxes.--(a)  Administrative
     5  Personnel; Joint Agreements.--Except as provided in subsections
     6  (b) and (c), [any such] a  political subdivision is hereby
     7  authorized to provide by ordinance or resolution for the
     8  creation of bureaus or the designation [of such bureaus or the],
     9  appointment and compensation of [such] officers, [clerks,
    10  collectors,] public employes, private agencies or other [person
    11  and other assistants] persons, and their employes[, either under
    12  existing departments, or otherwise] as [may be deemed]
    13  necessary, for the assessment and collection of taxes imposed
    14  under authority of this act. Each ordinance or resolution under
    15  this section authorizing a person, public employe or private
    16  agency to act [in the capacity and with the authority of] as a
    17  tax collector for the political subdivision shall continue in
    18  force without annual reauthorization unless otherwise repealed
    19  or revoked by the political subdivision. A political subdivision
    20  must enter into a written contract with an officer, private
    21  agency or other person, appointed or designated to collect the
    22  earned income tax.
    23     Except as provided in subsections (b) and (c), any political
    24  subdivisions imposing taxes under authority of this act are
    25  authorized to make joint agreements for the collection of such
    26  taxes or any of them. The same person or agency may be employed
    27  by two or more political subdivisions to collect any taxes
    28  imposed by them under authority of this act.
    29     (b)  Single Collector for Earned Income Taxes [When Certain
    30  School Districts Impose Such Taxes] Imposed by a School
    20070H1458B1805                  - 2 -     

     1  District.--Except as provided in subsection (c), whenever a
     2  school district of the second, third or fourth class shall be
     3  established pursuant to section 296[,] of the act of March 10,
     4  1949 (P.L.30), known as the "Public School Code of 1949," added
     5  August 8, 1963 (P.L. 564), and [such school district shall levy,
     6  assess and collect or provide for the levying, assessment and
     7  collection of] the school district levies a tax upon earned
     8  income, such school district and all cities, boroughs, towns and
     9  townships within its geographical limits which levy, assess and
    10  collect [or provide for the levying, assessment and collection
    11  of] a tax upon earned income[, may on January 1, 1967, or] shall
    12  as soon [thereafter] as the school district [shall provide for
    13  the levying, assessment and collection of taxes upon earned
    14  income, select one person or agency] has levied, assessed or
    15  collected an earned income tax, designate or appoint an officer,
    16  public employe or private agency to collect the taxes upon
    17  earned income imposed by all [such] political subdivisions
    18  within the geographic limits of the school district. In
    19  [selecting such person] order to designate or appoint the
    20  officer, public employe or private agency, each political
    21  subdivision shall share in the [selection] designation or
    22  appointment upon a basis agreed upon by each political
    23  subdivision, [or in] including the school district. In the
    24  absence of any agreement [on the basis of voting] at least
    25  ninety days prior to the end of the appointment or the
    26  expiration of a contract for earned income tax collection of all
    27  political subdivisions within the school district and including
    28  the school district, the board of school directors shall convene
    29  a meeting with at least ten days' notice by first class mail.
    30  The meeting shall be convened no less than sixty days prior to
    20070H1458B1805                  - 3 -     

     1  the end of the appointment or the expiration of a contract for
     2  earned income tax collection of all political subdivisions.
     3  Voting shall be conducted according to the proportion that the
     4  population of each bears to the entire population of the
     5  combined collection district, according to the latest official
     6  Federal census, and the majority of such votes cast shall
     7  determine the [person or agency selected] bureau, officer,
     8  public employe or private agency designated to collect the
     9  [taxes] earned income tax. The provisions of this paragraph
    10  shall not prohibit school districts and other political
    11  subdivisions which levy, assess and collect [or provide for the
    12  levying, assessment and collection of] taxes upon earned income,
    13  under authority of this act, from [selecting] designating or
    14  appointing the same [person] officer, public employe or private
    15  agency to collect such tax upon earned income in an area larger
    16  than the geographical limits of a school district established
    17  pursuant to section 296 of the "Public School Code of 1949."
    18     (c)  Single Tax Collector in Certain Home Rule
    19  Municipality.--In a municipality having a population under the
    20  2000 Federal decennial census of at least forty thousand and
    21  less than ninety thousand located in a second class county which
    22  municipality has adopted a home rule charter under 53 Pa.C.S.
    23  Pt. III Subpt. E (relating to home rule and optional plan
    24  government), the person or persons appointed by the board of
    25  school directors for the school district in which the
    26  municipality is located as collector or collectors of taxes
    27  levied by the school district under this act shall also serve as
    28  the collector or collectors of taxes levied by the municipality
    29  under this act.
    30     (d)  Records.--
    20070H1458B1805                  - 4 -     

     1     (1)  All tax collection records shall be a property of the
     2  political subdivision in which the taxes were collected. The
     3  political subdivision or its tax collector shall retain all
     4  records for at least seven years. Unclaimed tax records shall be
     5  retained for fifteen years.
     6     (2)  This subsection shall not be construed to preclude a tax
     7  collector from retaining copies of tax collection records.
     8     Section 2.  Section 11 of the act is amended to read:
     9     Section 11.  Audits of Earned Income Taxes.--Except in cities
    10  of the second class, [the governing body of] each political
    11  subdivision which levies, assesses and collects [or provides for
    12  the levying, assessment and collection of] a tax upon earned
    13  income, shall provide for not less than one examination each
    14  year of the books, accounts, financial statements, compliance
    15  reports and records of the income tax collector, by a certified
    16  public accountant, a firm of certified public accountants, a
    17  competent independent public accountant, or a firm of
    18  independent public accountants appointed by the [governing body]
    19  political subdivision. Whenever one person or agency is selected
    20  to collect earned income taxes for more than one political
    21  subdivision, the books, accounts and records of such person or
    22  agency shall be examined as provided above in the case of a tax
    23  collector for each political subdivision, except that the
    24  accountant shall be selected in the manner provided for
    25  selection of one person or agency to collect earned income taxes
    26  for the school district established under section 296 of the
    27  "Public School Code of 1949," and the cities, boroughs, towns
    28  and townships within the geographical limits of such school
    29  district. The examination shall be conducted according to
    30  generally accepted governmental auditing standards and shall
    20070H1458B1805                  - 5 -     

     1  include a financial statement, a report on the income tax
     2  officer's compliance with this act, a list of any findings of
     3  noncompliance with this act and a copy of a management letter if
     4  one is issued by the auditor. The reports of the audit shall be
     5  sent to the governing body [or bodies] of the political
     6  subdivision [or political subdivisions] employing the
     7  accountant. If there are findings of noncompliance, a copy of
     8  the report shall be filed with the Office of Attorney General
     9  and the Department of Community and Economic Development. No
    10  further or additional audit shall be performed by elected or
    11  appointed auditors.
    12     Section 3.  Division I, Subdivision A of Division III,
    13  Division IV and Division V of section 13 of the act, amended
    14  October 4, 1978 (P.L.930, No.177), December 9, 2002 (P.L.1364,
    15  No.166), April 5, 2004 (P.L.208, No.24), and November 30, 2004
    16  (P.L.1520, No.192), are amended and the section is amended by
    17  adding a division to read:
    18     Section 13.  Earned Income Taxes.--On and after the effective
    19  date of this act the remaining provisions of this section shall
    20  be included in or construed to be a part of each tax levied and
    21  assessed upon earned income by [any] a political subdivision
    22  [levying and assessing such tax pursuant to this act]. The
    23  definitions contained in this section shall be exclusive for any
    24  tax upon earned income and net profits levied and assessed
    25  pursuant to this act, and shall not be altered or changed by
    26  [any] a political subdivision [levying and assessing such tax].
    27                          I.  Definitions
    28     "Association." A partnership, limited partnership, or any
    29  other unincorporated group of two or more persons.
    30     "Business." An enterprise, activity, profession or any other
    20070H1458B1805                  - 6 -     

     1  undertaking of an unincorporated nature conducted for profit or
     2  ordinarily conducted for profit whether by a person,
     3  partnership, association, or any other entity.
     4     "Corporation." A corporation [or], joint stock association or
     5  limited liability company organized under the laws of the United
     6  States, the Commonwealth of Pennsylvania, or any other state,
     7  territory, foreign country or dependency.
     8     "Current year." The calendar year for which the tax is
     9  levied.
    10     "Department." The Department of Community and Economic
    11  Development of the Commonwealth.
    12     "Domicile." The place where one lives and has his permanent
    13  home and to which he has the intention of returning whenever he
    14  is absent. Actual residence is not necessarily domicile, for
    15  domicile is the fixed place of abode which, in the intention of
    16  the taxpayer, is permanent rather than transitory. Domicile is
    17  the voluntarily fixed place of habitation of a person, not for a
    18  mere special or limited purpose, but with the present intention
    19  of making a permanent home, until some event occurs to induce
    20  him to adopt some other permanent home. In the case of
    21  businesses, or associations, the domicile is that place
    22  considered as the center of business affairs and the place where
    23  its functions are discharged.
    24     "Earned income." Compensation as determined under section 303
    25  of the act of March 4, 1971 (P.L.6, No.2), known as the "Tax
    26  Reform Code of 1971," and regulations in 61 Pa. Code Pt. I
    27  Subpt. B Art. V (relating to personal income tax), not
    28  including, however, wages or compensation paid to individuals on
    29  active military service. Employe business expenses are allowable
    30  deductions as determined under Article III of the "Tax Reform
    20070H1458B1805                  - 7 -     

     1  Code of 1971." The amount of any housing allowance provided to a
     2  member of the clergy shall not be taxable as earned income. In
     3  determining earned income, the taxpayer may not offset business
     4  losses.
     5     "Income tax officer or officer." [Person] A bureau, person,
     6  public employe or private agency designated by [governing body]
     7  a political subdivision to collect and administer the tax on
     8  earned income and net profits authorized under this act.
     9     "Employer." A person, partnership, association, business,
    10  corporation, limited liability company, institution,
    11  governmental body or unit or agency, or any other entity
    12  employing one or more persons for a salary, wage, commission or
    13  other compensation.
    14     "Net profits." The net income from the operation of a
    15  business, profession, or other activity, except corporations,
    16  determined under section 303 of the act of March 4, 1971 (P.L.6,
    17  No.2), known as the "Tax Reform Code of 1971," and regulations
    18  in 61 Pa. Code Pt. I Subpt. B Art. V (relating to personal
    19  income tax). In determining net profits, the taxpayer may offset
    20  business losses from one business, profession or activity
    21  against profits from another business, profession or activity.
    22  The term does not include income which is not paid for services
    23  provided and which is in the nature of earnings from an
    24  investment. For taxpayers engaged in the business, profession or
    25  activity of farming, the term shall not include:
    26     (1)  any interest earnings generated from any monetary
    27  accounts or investment instruments of the farming business;
    28     (2)  any gain on the sale of farm machinery;
    29     (3)  any gain on the sale of livestock held twelve months or
    30  more for draft, breeding or dairy purposes; and
    20070H1458B1805                  - 8 -     

     1     (4)  any gain on the sale of other capital assets of the
     2  farm.
     3     "Nonresident." A person, partnership, association, business,
     4  corporation, limited liability company or any other entity
     5  domiciled outside the taxing district.
     6     "Person or individual." A natural person.
     7     "Political subdivision." A city of the second class, city of
     8  the second class A, city of the third class, borough, town,
     9  township of the first class, township of the second class,
    10  school district of the second class, school district of the
    11  third class or school district of the fourth class.
    12     "Preceding year." The calendar year before the current year.
    13     "Private agency." Any person, partnership, association,
    14  business corporation or limited liability company, engaged in
    15  the business of collecting or administering a tax under this
    16  act.
    17     "Resident." A person, partnership, association or any other
    18  entity domiciled in the taxing district.
    19     "Succeeding year." The calendar year following the current
    20  year.
    21     "Taxpayer." A person, partnership, association[,] or any
    22  other entity, required hereunder to file a return of earned
    23  income or net profits, or to pay a tax thereon.
    24     "Tax records." Tax returns, supporting schedules,
    25  correspondence with auditors or taxpayers, account books and
    26  other documents obtained or created by the officer to implement
    27  the collection of a tax under this act. The officer may submit
    28  computerized summaries of tax returns and other documents in
    29  lieu of the actual documents.
    30     * * *
    20070H1458B1805                  - 9 -     

     1                III.  Declaration and Payment of Tax
     2                          A.  Net Profits.
     3     (1)  Every taxpayer making net profits shall, as the
     4  [governing body] political subdivision elects, (i) pay to the
     5  officer an annual payment of tax due on or before April 15[,] of
     6  the succeeding year for the period beginning January 1[,] and
     7  ending December 31[,] of the current year, or (ii) on or before
     8  April 15[,] of the current year, make and file with the officer
     9  on a form prescribed [or approved by the officer] by the
    10  department, a declaration of his estimated net profits during
    11  the period beginning January 1[,] and ending December 31[,] of
    12  the current year, and pay to the officer in four equal quarterly
    13  installments the tax due thereon as follows: the first
    14  installment at the time of filing the declaration, and the other
    15  installments on or before June 15[,] of the current year,
    16  September 15[,] of the current year, and January 15[,] of the
    17  succeeding year, respectively.
    18     (2)  Where the [governing body] political subdivision elects
    19  to require the filing of a declaration and quarterly payments,
    20  any taxpayer who first anticipates any net profit after April
    21  15[,] of the current year, shall make and file the declaration
    22  hereinabove required on or before June 15[,] of the current
    23  year, September 15[,] of the current year, or December 31[,] of
    24  the current year, whichever of these dates next follows the date
    25  on which the taxpayer first anticipates such net profit, and pay
    26  to the officer in equal installments the tax due thereon on or
    27  before the quarterly payment dates which remain after the filing
    28  of the declaration.
    29     (3)  Where the [governing body] political subdivision
    30  requires a declaration of estimated net profits and quarterly
    20070H1458B1805                 - 10 -     

     1  payments of tax due on such profits, every taxpayer shall, on or
     2  before April 15[,] of the succeeding year, make and file with
     3  the officer on a form prescribed or approved by the officer a
     4  final return showing the amount of net profits earned during the
     5  period beginning January 1[,] of the current year, and ending
     6  December 31[,] of the current year, the total amount of tax due
     7  thereon and the total amount of tax paid thereon. At the time of
     8  filing the final return, the taxpayer shall pay to the officer
     9  the balance of tax due or shall make demand for refund or credit
    10  in the case of overpayment.
    11     Any taxpayer may, in lieu of paying the fourth quarterly
    12  installment of his estimated tax, elect to make and file with
    13  the officer on or before January 31, of the succeeding year, the
    14  final return as hereinabove required.
    15     (4)  [The officer may be authorized to provide by regulation
    16  for the making and filing of] The department may adopt a
    17  regulation authorizing the officer to make and file adjusted
    18  declarations of estimated net profits, and for the payments of
    19  the estimated tax in cases where a taxpayer who has filed [the
    20  declaration hereinabove required] under paragraph (1), (2) or
    21  (3) anticipates additional net profits not previously declared
    22  or finds that he has overestimated his anticipated net profits.
    23     (5)  Every taxpayer who discontinues business prior to
    24  December 31[,] of the current year[,] shall, within thirty days
    25  after the discontinuance of business, file his final return as
    26  [hereinabove] required under this division and pay the tax due.
    27     * * *
    28                     IV.  Collection at Source
    29     (a)  Every employer having an office, factory, workshop,
    30  branch, warehouse, or other place of business within the taxing
    20070H1458B1805                 - 11 -     

     1  jurisdiction imposing a tax on earned income or net profits
     2  within the taxing district who employs one or more persons,
     3  other than domestic servants, for a salary, wage, commission or
     4  other compensation, who has not previously registered, shall,
     5  within fifteen days after becoming an employer, register with
     6  the officer his name and address and such other information as
     7  the officer may require.
     8     (b)  Every employer having an office, factory, workshop,
     9  branch, warehouse, or other place of business within the taxing
    10  jurisdiction imposing a tax on earned income or net profits
    11  within the taxing district who employs one or more persons,
    12  other than domestic servants, for a salary, wage, commission, or
    13  other compensation, shall deduct at the time of payment thereof,
    14  the tax imposed by ordinance or resolution on the earned income
    15  due to his employe or employes, and shall, on or before April
    16  30, of the current year, July 31, of the current year, October
    17  31, of the current year, and January 31, of the succeeding year,
    18  file a return and pay to the officer the amount of taxes
    19  deducted during the preceding three-month periods ending March
    20  31, of the current year, June 30, of the current year, September
    21  30, of the current year, and December 31, of the current year,
    22  respectively. Such return unless otherwise agreed upon between
    23  the officer and employer shall show the name and social security
    24  number of each such employe, the earned income of such employe
    25  during such preceding three-month period, the tax deducted
    26  therefrom, the political subdivisions imposing the tax upon such
    27  employe, the total earned income of all such employes during
    28  such preceding three-month period, and the total tax deducted
    29  therefrom and paid with the return.
    30     Any employer who for two of the preceding four quarterly
    20070H1458B1805                 - 12 -     

     1  periods has failed to deduct the proper tax, or any part
     2  thereof, or has failed to pay over the proper amount of tax to
     3  the taxing authority, may be required by the officer to file his
     4  return and pay the tax monthly. In such cases, payments of tax
     5  shall be made to the officer on or before the last day of the
     6  month succeeding the month for which the tax was withheld.
     7     (c)  On or before February 28, of the succeeding year, every
     8  employer shall file with the officer:
     9     (1)  An annual return showing the total amount of earned
    10  income paid, the total amount of tax deducted, and the total
    11  amount of tax paid to the officer for the period beginning
    12  January 1, of the current year, and ending December 31, of the
    13  current year.
    14     (2)  A return withholding statement for each employe employed
    15  during all or any part of the period beginning January 1, of the
    16  current year, and ending December 31, of the current year,
    17  setting forth the employe's name, address and social security
    18  number, the amount of earned income paid to the employe during
    19  said period, the amount of tax deducted, [the political
    20  subdivisions imposing the tax upon such employe,] each political
    21  subdivision to which the withheld tax is remitted and the amount
    22  of tax paid to the officer. Every employer shall furnish two
    23  copies of the individual return to the employe for whom it is
    24  filed.
    25     (d)  Every employer who discontinues business prior to
    26  December 31, of the current year, shall, within thirty days
    27  after the discontinuance of business, file the returns and
    28  withholding statements hereinabove required and pay the tax due.
    29     (e)  Except as otherwise provided in section 9, every
    30  employer who wilfully or negligently fails or omits to make the
    20070H1458B1805                 - 13 -     

     1  deductions required by this section shall be liable for payment
     2  of the taxes which he was required to withhold to the extent
     3  that such taxes have not been recovered from the employe.
     4     (f)  The failure or omission of any employer to make the
     5  deductions required by this section shall not relieve any
     6  employe from the payment of the tax or from complying with the
     7  requirements of the ordinance or resolution relating to the
     8  filing of declarations and returns.
     9                  V.  Powers and Duties of Officer
    10     (a)  It shall be the duty of the income tax officer to
    11  collect and receive [the] resident and nonresident taxes, fines
    12  and penalties imposed by the ordinance or resolution. It shall
    13  also be [his duty] the duty of the officer to keep a record
    14  showing the amount received [by him] from each person or
    15  business paying the tax and the date of such receipt.
    16     (b)  Each officer, before entering upon his official duties
    17  shall give and acknowledge a bond to the political subdivision
    18  [or political subdivisions] appointing him. If such political
    19  subdivision [or political subdivisions] shall by resolution
    20  designate any bond previously given by the officer as adequate,
    21  such bond shall be sufficient to satisfy the requirements of the
    22  subsection. The bond shall be renewed annually.
    23     Each such bond shall be joint and several, with one or more
    24  corporate sureties which shall be surety companies authorized to
    25  do business in this Commonwealth and duly licensed by the
    26  Insurance Commissioner of this Commonwealth.
    27     Each bond shall be conditioned upon the faithful discharge by
    28  the officer, his clerks, assistants and appointees of all trusts
    29  confided in him by virtue of his office, upon the faithful
    30  execution of all duties required of him by virtue of his office,
    20070H1458B1805                 - 14 -     

     1  upon the just and faithful accounting or payment over, according
     2  to law, of all moneys and all balances thereof paid to, received
     3  or held by him by virtue of his office and upon the delivery to
     4  his successor [or successors] in office of all books, papers,
     5  documents or other official things held in right of his office.
     6     Each such bond shall be taken in the name of the appointing
     7  authority [or authorities], and shall be for the use of the
     8  political subdivision [or political subdivisions] appointing the
     9  officer, and for the use of such other person [or persons] for
    10  whom money shall be collected or received, or as his or her
    11  interest shall otherwise appear, in case of a breach of any of
    12  the conditions thereof by the acts or neglect of the principal
    13  on the bond.
    14     The political subdivision [or political subdivisions]
    15  appointing the officer, or any person may sue upon the [said]
    16  bond in its or his own name for its or his own use.
    17     Each such bond shall contain the name [or names] of the
    18  surety company [or companies] bound thereon. The political
    19  subdivision [or political subdivisions] appointing the officer
    20  shall fix the amount of the bond at an amount [equal to the
    21  maximum amount of taxes which may be in the possession]
    22  sufficient to secure the financial responsibility of the officer
    23  [at any given time.] in accordance with guidelines relating to
    24  the amount of the bond adopted by the department. Copies of the
    25  bond shall be filed with the political subdivision appointing
    26  the officer.
    27     The political subdivision [or political subdivisions]
    28  appointing the officer may, at any time, upon cause shown and
    29  due notice to the officer, and his surety [or sureties], require
    30  or allow the substitution or the addition of a surety company
    20070H1458B1805                 - 15 -     

     1  acceptable to such political subdivision [or political
     2  subdivisions] for the purpose of making the bond sufficient in
     3  amount, without releasing the surety [or sureties] first
     4  approved from any accrued liability or previous action on such
     5  bond.
     6     The political subdivision [or political subdivisions]
     7  appointing the officer shall designate the custodian of the bond
     8  required to be given by the officer. A copy of the bond shall be
     9  made available upon request to a political subdivision, or the
    10  officer collector appointed by the political subdivision,
    11  seeking payment or distribution of a tax authorized by this act.
    12     (b.1)  The department shall promulgate regulations relating
    13  to the administration, collection, enforcement, removal of
    14  officers from office and appeal process under this act. The
    15  regulations shall include required forms, including a
    16  certificate of residency form, returns and declarations.
    17     (c)  The officer charged with the administration and
    18  enforcement of the [provisions of the] ordinance or resolution
    19  [is hereby empowered to prescribe, adopt, promulgate and
    20  enforce, rules and regulations relating to any matter pertaining
    21  to the administration and enforcement of the ordinance or
    22  resolution, including provisions for the re-examination and
    23  correction of declarations and returns, and of payments alleged
    24  or found to be incorrect, or as to which an overpayment is
    25  claimed or found to have occurred, and to make refunds in case
    26  of overpayment, for any period of time not to exceed six years
    27  subsequent to the date of payment of the sum involved, and to
    28  prescribe forms necessary for the administration of the
    29  ordinance or resolution. No rule or regulation of any kind shall
    30  be enforceable unless it has been approved by resolution by the
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     1  governing body. A copy of such rules and regulations currently
     2  in force shall be available for public inspection.] shall comply
     3  with all regulations adopted by the department under this act.
     4  The officer may use rules and regulations previously adopted by
     5  the officer or the political subdivision in accordance with this
     6  act until the adoption of regulations by the department.
     7     (c.1)  An officer shall make refunds for overpayment of taxes
     8  under this act for a period not to exceed three years subsequent
     9  to the date of payment.
    10     (d)  The officer shall refund, on petition of, and proof by
    11  the taxpayer, earned income tax paid on the taxpayer's ordinary
    12  and necessary business expenses, to the extent that such
    13  expenses are not paid by the taxpayer's employer.
    14     (e)  The officer and agents designated by him are hereby
    15  authorized to examine the books, papers, and records of any
    16  employer [or of any taxpayer or of any], taxpayer or other
    17  person whom the officer reasonably believes to be an employer or
    18  taxpayer, in order to verify the accuracy of any declaration or
    19  return, or if no declaration or return was filed, to ascertain
    20  the tax due. Every employer [and every taxpayer and every
    21  person], taxpayer or other person whom the officer reasonably
    22  believes to be an employer or taxpayer, is hereby directed and
    23  required to give to the officer, or to any agent designated by
    24  [him] the officer, the means, facilities and opportunity for
    25  such examination and investigations[, as are hereby] authorized
    26  under this act.
    27     (f)  Any information gained by the officer, his agents, or by
    28  any other official or agent of the [taxing district] political
    29  subdivision, as a result of any declarations, returns,
    30  investigations, hearings or verifications required or authorized
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     1  by the ordinance or resolution, shall be confidential, except
     2  for official purposes and except in accordance with a proper
     3  judicial order, or as otherwise provided by law.
     4     (g)  The officer is authorized to establish different filing,
     5  reporting and payment dates for taxpayers whose fiscal years do
     6  not coincide with the calendar year.
     7     (h)  The officer shall distribute earned income taxes to the
     8  appropriate political subdivisions within sixty days of the
     9  deadline for payment by an employer as set forth in Division
    10  IV(b). [The political subdivisions] A political subdivision
    11  shall not be required to request the officer to distribute the
    12  funds collected but shall at least annually reconcile their
    13  receipts with the records of the officer and return to or credit
    14  the officer with any overpayment. A political subdivision shall
    15  not be required to pay a fee or commission to the other
    16  political subdivision or its tax officer for tax revenue
    17  distributed under this subsection. If the officer, within one
    18  year after receiving a tax payment, cannot identify the taxing
    19  jurisdiction entitled to a tax payment, he shall make payment to
    20  the municipality in which the tax was collected. If earned
    21  income taxes are not distributed to the appropriate political
    22  subdivision within one year of receipt, the political
    23  subdivision may make a written demand on a tax officer or
    24  political subdivision for tax revenues collected and
    25  attributable to residents of the political subdivision making
    26  the demand. If the taxes attributable to the residents of the
    27  political subdivision making the demand are not paid within
    28  thirty days from the date of the demand, the political
    29  subdivision, person, public employe or private agency designated
    30  by the political subdivision may enter into an arbitration
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     1  agreement with the officer under 42 Pa.C.S. Ch. 73 Subch. A
     2  (relating to statutory arbitration) or bring an action in [an
     3  appropriate] the court of common pleas where the officer is a
     4  resident or where the political subdivision is located in the
     5  name of the taxing district for the recovery of taxes not
     6  distributed in accordance with this subsection. The action must
     7  be brought within seven years of the collection of the taxes.
     8     (i)  The officer shall, on or before the tenth day of each
     9  month, provide a written report, on a form adopted by the
    10  department, to the appropriate official of each political
    11  subdivision for which taxes were collected during the previous
    12  month and to the department. The report shall include the names
    13  of taxpayers and employers, the date of collection, penalties
    14  and interest on collections, costs of collection, amounts owed
    15  to other political subdivisions, refunds, recoveries and
    16  overpayments.
    17     (j)  An income tax officer shall file an annual report with
    18  the political subdivision and the department. The report shall
    19  include all tax collection information for the most recently
    20  completed tax year as required by the department. The report
    21  shall be filed by June 15 of the year following the close of the
    22  reporting year.
    23     * * *
    24        X.  Fines and Penalties Against Income Tax Officers
    25     (a)  A political subdivision which brings an action under
    26  Division V(h) may seek equitable relief, including an accounting
    27  of all undistributed taxes and monetary damages in the form of
    28  recovery of the taxes not previously distributed plus interest
    29  calculated from the date that the taxes should have been
    30  distributed. In addition, the court may impose a civil penalty
    20070H1458B1805                 - 19 -     

     1  not to exceed two thousand five hundred dollars ($2,500) for
     2  each tax quarter for which taxes were not distributed in
     3  accordance with Division V(h), plus reasonable costs and
     4  attorney fees. If an officer fails to distribute earned income
     5  taxes to the appropriate political subdivision as required under
     6  Division V(h), for four consecutive tax quarters, the court may
     7  impose a civil penalty not to exceed five thousand dollars
     8  ($5,000).
     9     (b)  If an officer fails to submit the report required under
    10  Division V(i) or (j), a political subdivision entitled to
    11  receive the report may bring an action in the court of common
    12  pleas of that political subdivision and the court may impose a
    13  penalty of twenty dollars ($20) a day for each day that the
    14  report is overdue, not to exceed five hundred dollars ($500). If
    15  a report submitted under Division V(j) includes any findings of
    16  noncompliance, the officer is responsible for a civil penalty of
    17  not less than five hundred dollars ($500) but not more than two
    18  thousand five hundred dollars ($2,500).
    19     (c)  An officer who violates any other provision of this act
    20  shall be subject to a civil penalty of up to two thousand five
    21  hundred dollars ($2,500) for each violation.
    22     (d)  An action against an officer for a violation of this act
    23  may be brought by a political subdivision in which the officer
    24  collects taxes, a political subdivision owed taxes by the
    25  officer, by a surety or by the department.
    26     (e)  A political subdivision shall remove or rescind the
    27  appointment of an income tax official who has been penalized
    28  under subsection (c) more than three times.
    29     Section 4.  Section 21 of the act, amended November 30, 2004
    30  (P.L.1520, No.192), is amended to read:
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     1     Section 21.  Collection of Taxes by Suit.--Each [taxing
     2  district or person,] political subdivision, bureau, officer,
     3  public employe [or], private agency or other person designated
     4  by the taxing district shall have power to collect unpaid taxes
     5  from the persons owing such taxes by suit in assumpsit or other
     6  appropriate remedy. Upon each such judgment, execution may be
     7  issued without any stay or benefit of any exemption law. The
     8  right of each [such taxing district] political subdivision to
     9  collect unpaid taxes under [the provisions of] this section
    10  shall not be affected by the fact that such taxes have been
    11  entered as liens in the office of the prothonotary, or the fact
    12  that the property against which they were levied has been
    13  returned to the county commissioners for taxes for prior years.
    14     Section 5.  Section 22 of the act is amended to read:
    15     Section 22.  Penalties.--Except as otherwise provided in the
    16  case of any tax levied and assessed upon earned income, any such
    17  political subdivision shall have power to prescribe and enforce
    18  reasonable penalties for the nonpayment, within the time fixed
    19  for their payment, of taxes imposed under authority of this act
    20  and for the violations of the provisions of ordinances or
    21  resolutions passed under authority of this act.
    22     If for any reason any tax levied and assessed upon earned
    23  income by any such political subdivision is not paid when due,
    24  interest at the rate of six percent per annum on the amount of
    25  said tax, and an additional penalty of one-half of one percent
    26  of the amount of the unpaid tax or, if more than twenty-five
    27  percent of the amount reported is underreported, an additional
    28  penalty of twenty-five percent of the amount of the unreported
    29  tax for each month or fraction thereof during which the tax
    30  remains unpaid, shall be added and collected. When suit is
    20070H1458B1805                 - 21 -     

     1  brought for the recovery of any such tax, the person liable
     2  therefor shall, in addition, be liable for the costs of
     3  collection and the interest and penalties herein imposed.
     4     Section 6.  Section 22.1 of the act, added November 30, 2004
     5  (P.L.1520, No.192), is amended to read:
     6     Section 22.1.  Costs of Collection of Delinquent Per Capita,
     7  Occupation, Occupational Privilege and Earned Income Taxes.--(a)
     8  A person, public employe or private agency designated by [a
     9  governing body of] a political subdivision to collect and
    10  administer a [per capita, occupation, occupational privilege or
    11  earned income] tax under this act may impose and collect the
    12  reasonable costs incurred to provide notices of delinquency or
    13  to implement [similar] other procedures utilized to collect
    14  delinquent taxes from a taxpayer, as approved by [the governing
    15  body of] the political subdivision. Reasonable costs collected
    16  may be retained by the officer, person, public employe or
    17  private agency designated to collect the tax, as agreed to by
    18  [the governing body of] the political subdivision. An itemized
    19  accounting of all costs collected shall be remitted to the
    20  political subdivision on an annual basis.
    21     (b)  Costs related to the collection of unpaid per capita,
    22  occupation or occupational privilege taxes may only be assessed,
    23  levied and collected for five years from the last day of the
    24  calendar year in which the tax was due.
    25     (c)  A delinquent taxpayer may not bring an action for
    26  reimbursement, refund or elimination of reasonable costs of
    27  collection assessed or imposed prior to the effective date of
    28  this section. Additional costs may not be assessed on delinquent
    29  taxes collected prior to the effective date of this section.
    30     Section 7.  This act shall take effect in 60 days.
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