See other bills
under the
same topic
PRINTER'S NO. 48
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
34
Session of
2019
INTRODUCED BY RYAN, DIAMOND, GROVE, IRVIN, KEEFER, LAWRENCE,
MILLARD AND JONES, JANUARY 28, 2019
REFERRED TO COMMITTEE ON FINANCE, JANUARY 28, 2019
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in personal income tax, repealing provisions
relating to definitions, to withholding tax requirement for
nonemployer payors, to information statement for nonemployer
payors, to information statement for payees, to time for
filing payors' returns, to payment of taxes withheld for
nonemployer payors, to payor's liability for withheld taxes,
to payor's failure to withhold, to amount of withholding tax,
to treatment of nonresident partners, members or
shareholders, to withholding on income and to annual
withholding statement and further providing for requirements
concerning returns, notices, records and statements and for
additions, penalties and fees.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Sections 316, 316.2, 317.1, 317.2, 318.1, 319.1,
320.1, 321.2, 324.1(c), 324.2(b) and (c), 324.4 and 324.5 of the
act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
of 1971, are repealed:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
[Section 316. Definitions.--The following words, terms and
phrases, when used in this part, shall have the meanings
ascribed to them in this section, except where the context
clearly indicates a different meaning:
"Payee." The person receiving the payments subject to
withholding under this part.
"Payments." The term does not include a partner or
shareholder's distributive share of income from a partnership or
Pennsylvania S corporation.
"Payor." The person required to withhold under this part.
Section 316.2. Withholding Tax Requirement for Nonemployer
Payors.--(a) To the extent not already required to withhold tax
on payments under section 316.1, a person that:
(1) makes payments of income from sources within this
Commonwealth described in section 303(a)(1) or (2) to either a
nonresident individual or an entity that is disregarded under
section 307.21 that has a nonresident member; and
(2) is required under section 335(f)(1) to file a copy of
form 1099-MISC with the department regarding the payments;
shall deduct and withhold from the payments an amount equal to
the net amount of the payments multiplied by the tax rate
specified under section 302(b).
(b) Withholding of tax by payors is optional and at the
discretion of the payor with respect to payees who receive
payments of less than $5,000 annually from the payor.
(c) This section shall not apply to payments made by a payor
to a payee if the payor is:
(1) The United States or an agency or instrumentality
thereof; or
(2) The Commonwealth or an agency, instrumentality or
20190HB0034PN0048 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
political subdivision thereof.
(d) The department may prescribe regulations to implement
and clarify the withholding requirement set forth in this
section.
Section 317.1. Information Statement for Nonemployer
Payors.--Every payor required to deduct and withhold tax under
section 316.2 shall furnish to a payee to whom the payor has
paid income from sources within this Commonwealth during the
calendar year a copy of form 1099-MISC required under section
335(f)(1). The copy of form 1099-MISC required by this section
for each calendar year shall be forwarded to the payee on or
before March 1 of the year succeeding the calendar year.
Section 317.2. Information Statement for Payees.--Every
payee receiving a copy of form 1099-MISC from a payor under
section 317.1 shall file a duplicate of such information return
with the payee's State income tax return.
Section 318.1. Time for Filing Payors' Returns.--Every payor
required to deduct and withhold tax under section 316.2 shall
file a quarterly withholding return on or before the last day of
April, July, October and January for each three-month period
ending the last day of March, June, September and December. The
quarterly returns shall be filed with the department in the
manner prescribed by regulation.
Section 319.1. Payment of Taxes Withheld for Nonemployer
Payors.--Every payor withholding tax under section 316.2 shall
pay over to the department or to a depository designated by the
department the tax required to be deducted and withheld under
section 316.2. The time for paying over the withheld tax shall
be as set forth in section 319(1), (2), (3) and (4).
Section 320.1. Payor's Liability for Withheld Taxes.--Every
20190HB0034PN0048 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
payor required to deduct and withhold tax under section 316.2 is
hereby made liable for such tax. For purposes of assessment and
collection, any amount required to be withheld and paid over to
the department and any additions to tax, penalties and interest
with respect thereto shall be considered the tax of the payor.
All taxes deducted and withheld from payees pursuant to section
316.2 or under color of section 316.2 shall constitute a trust
fund for the Commonwealth and shall be enforceable against such
payor, his representative or any other person receiving any part
of such fund.
Section 321.2. Payor's Failure to Withhold.--If a payor
fails to deduct and withhold tax as prescribed under section
316.2 and thereafter the tax which may be credited is paid, the
tax which was required to be deducted and withheld shall not be
collected from the payor, but the payor shall not be relieved of
the liability for any penalty, interest or additions to the tax
imposed with respect to such failure to deduct and withhold.]
Section 324.1. Amount of Withholding Tax.--* * *
[(c) There shall not be taken into account any share of
income of nonresident partner, member or shareholder from
sources within this Commonwealth to the extent that the amount
was subject to withholding under section 324.4 and to the extent
withholding actually occurred under section 324.4 by the time
withholding is required to be made by the partnership,
association or Pennsylvania S corporation under section 324.]
Section 324.2. Treatment of Nonresident Partners, Members or
Shareholders.--* * *
[(b) Each nonresident lessor shall be allowed a credit for
the nonresident lessor's share of the withholding tax paid by
the lessee under section 324.4.
20190HB0034PN0048 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(c) The credits under this section shall be allowed for the
nonresident lessor's taxable year in which the lessee withheld
tax.
Section 324.4. Withholding on Income.--(a) Every lessee of
Pennsylvania real estate who makes a lease payment in the course
of a trade or business to a nonresident lessor shall withhold
Pennsylvania personal income tax on rental payments to such
nonresident lessor.
(b) Every lessee shall withhold from each payment made to a
lessor an amount equal to the net amount payable to the lessor
multiplied by the tax rate specified under section 302(b).
(c) (Reserved).
(d) The withholding of tax under this section is optional
and at the discretion of the lessee with respect to payments to
a lessor who receives less than $5,000 annually on a lease.
(e) For purposes of this section, the term or phrase:
(1) "Lessor" shall include an individual, estate or trust.
(2) "Lease payment" shall include, but not be limited to,
rents, royalties, bonus payments, damage payments, delay rents
and other payments made pursuant to a lease, other than
compensation derived from intangible property having a taxable
or business situs in this Commonwealth. Classification as a
"lease payment" under this section is solely for the purposes of
establishing withholding requirements and shall not be relevant
for a determination as to the proper income classification of
any such lease payment.
(3) "In the course of a trade or business" shall include any
person or business entity making lease payments to a nonresident
or agent of a nonresident who collects rent or lease payments on
behalf of a nonresident owner other than a tenant of residential
20190HB0034PN0048 - 5 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
property.
Section 324.5. Annual Withholding Statement.--(a) Every
lessee shall furnish to each lessor an annual statement at such
time and in such manner as may be prescribed by the department
showing the total payments made by the lessee to the lessor
during the preceding taxable year and showing the amount of the
tax deducted and withheld from the payments under section 324.4.
(b) Every lessee shall file with the department an annual
statement at such time and in such manner as may be prescribed
by the department showing the total payments made to each lessor
subject to withholding during the preceding taxable year or any
portion of the preceding taxable year and the total amount of
tax deducted and withheld under section 324.4.
(c) Every lessor shall file a duplicate of the annual
statement furnished by the lessee under this section with the
lessor's State income tax return.]
Section 2. Sections 335(f) and 352(f), (h) and (j) of the
act, amended October 30, 2017 (P.L.672, No.43), are amended to
read:
Section 335. Requirements Concerning Returns, Notices,
Records and Statements.--* * *
(f) The following apply:
(1) Any person who:
[(i) makes payments of Pennsylvania source income that fall
within any of the eight classes of income enumerated in section
303(a);
(ii) makes such payments to an individual, an entity treated
as a partnership for tax purposes or a single member limited
liability company; and
(iii) is required to make a form 1099-MISC return to the
20190HB0034PN0048 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Secretary of the Treasury of the United States with respect to
such payments, shall file a copy of such form 1099-MISC with the
department and send a copy of such form 1099-MISC to the payee
by March 1 of each year or, if filed electronically, by March 31
of each year. If the form 1099-MISC filed by a payor with the
Secretary of the Treasury of the United States is not completed
in such a manner that State income and State tax withheld
information, currently boxes 16 through 18 on Federal form 1099-
MISC, is reflected thereon, the payor shall update the copies of
form 1099-MISC to be provided pursuant to this section to
reflect such information prior to filing it with the department
and sending it to the payee.]
(i) makes payments of income from sources within this
Commonwealth;
(ii) makes payments of nonemploye compensation or payments
under an oil and gas lease under subparagraph (i) to a resident
or nonresident individual, an entity treated as a partnership
for tax purposes or a single member limited liability company;
and
(iii) is required to make a form 1099-MISC return to the
Secretary of the Treasury of the United States with respect to
the payments shall file a copy of form 1099-MISC with the
department and send a copy of form 1099-MISC to the payee by the
Federal filing deadline each year.
(2) If the payor is required to perform electronic filing
for Pennsylvania employer withholding purposes, the form 1099-
MISC shall be filed electronically with the department.
[(3) As used in this subsection, the following words and
phrases shall have the meanings given to them in this paragraph
unless the context clearly indicates otherwise:
20190HB0034PN0048 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
"Payee." The person receiving the payments subject to
withholding under this subsection.
"Payments." The term does not include a partner or
shareholder's distributive share of income from a partnership or
Pennsylvania S corporation.
"Payor." The person required to withhold under this
subsection.]
* * *
Section 352. Additions, Penalties and Fees.--* * *
(f) (1) Any person required under the provisions of section
317 to furnish a statement to an employe who wilfully furnishes
a false or fraudulent statement, or who wilfully fails to
furnish a statement in the manner, at the time, and showing the
information required under section 317 and the regulations
prescribed thereunder, shall, for each such failure, be subject
to a penalty of fifty dollars ($50) for each employe.
(2) Any person required to furnish an information return who
furnishes a false or fraudulent return or who fails to file or
provide an information return shall be subject to a penalty of
two hundred fifty dollars ($250).
(3) Every partnership, estate, trust or Pennsylvania S
corporation required to file a return with the department under
the provisions of section 330.1 or 335(c) who furnishes a false
or fraudulent return or who fails to file the return in the
manner and at the time required under section 330.1 or 335(c)
shall be subject to a penalty of $250 for each failure.
(4) Any person required to file a copy of form 1099-MISC
with the department under the provisions of section 335(f) who
wilfully furnishes a false or fraudulent form or who wilfully
fails to file the form in the manner, at the time and showing
20190HB0034PN0048 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
the information required under section 335(f) shall, for each
such failure, be subject to a penalty of fifty dollars ($50).
(5) Any person required under the provisions of section
335(f) to furnish a copy of form 1099-MISC to a payee who
wilfully furnishes a false or fraudulent form or who wilfully
fails to furnish a form in the manner, at the time and showing
the information required by section 335(f) shall, for each such
failure, be subject to a penalty of fifty dollars ($50).
[(6) Any person required to file an annual statement with
the department under the provisions of section 324.5 who
wilfully furnishes a false or fraudulent statement or who
wilfully fails to file the statement in the manner, at the time
and showing the information required under section 324.5 and the
regulations prescribed under section 324.5 shall, for each such
failure, be subject to a penalty of fifty dollars ($50).
(7) Any person required under the provisions of section
324.5 to furnish an annual statement to a lessor who wilfully
furnishes a false or fraudulent statement or who wilfully fails
to furnish a statement in the manner, at the time and showing
the information required by section 324.5 and the regulations
prescribed under section 324.5 shall, for each such failure, be
subject to a penalty of fifty dollars ($50).]
(h) If any amount of tax required to be withheld by an
employer and paid over to the department under section 319 [or
319.1] is not paid on or before the due date prescribed for
filing the quarterly return under section 318 [or 318.1],
determined without regard to an extension of time for filing,
there shall be added to the tax and paid to the department each
month five per cent of such underpayment for each month or
fraction thereof from the due date, for the period from the due
20190HB0034PN0048 - 9 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
date to the date paid; but the underpayment shall, for purposes
of computing the addition for any month, be reduced by the
amount of any part of the tax which is paid by the beginning of
that month. The total of such additions shall not exceed fifty
per cent of the amount of tax required to be shown on the return
reduced by the amount of any part of the tax which is paid by
the return due date and by the amount of any credit against the
tax which may be claimed on the return.
* * *
(j) If any amount of tax required to be withheld by a
partnership, association[,] or Pennsylvania S corporation [or
lessee] and paid over to the department under section 324 [or
324.4] is not paid on or before the date prescribed therefor,
there shall be added to the tax and paid to the department each
month five per cent of such underpayment for each month or
fraction thereof from the due date, for the period from the due
date to the date paid; but the underpayment shall, for purposes
of computing the addition for any month, be reduced by the
amount of any part of the tax which is paid by the beginning of
that month. The total of such additions shall not exceed fifty
per cent of the amount of such tax.
Section 3. The amendment or repeal of sections 316, 316.2,
317.1, 317.2, 318.1, 319.1, 320.1, 321.2, 324.1(c), 324.2(b) and
(c), 324.4, 324.5, 335(f) and 352(f), (h) and (j) of the act
shall apply retroactively to December 30, 2018.
Section 4. This act shall take effect in 60 days.
20190HB0034PN0048 - 10 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26