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House of Representatives
Session of 2017 - 2018 Regular Session

MEMORANDUM

Posted:	January 12, 2018 03:19 PM
From:	Representative Francis X. Ryan
To:	All House members
Subject:	LEGISLATION: 1099-MISC NON-RESIDENT WITHOLDING REPEAL

The Tax Code signed into law as Act 43 contains a provision to require entities to withhold Pennsylvania Personal Income Taxes and other taxes where applicable, on out-of-state payments made to taxpayers of other states where a 1099-MISC tax reporting form is used. Additionally, Act 43 makes the tax a liability of the payor which is an extremely dangerous precedent. Such a provision encourages the payee to fail to file, thereby putting the payor on notice as being liable for the tax thereby shifting the tax burden effectively to an in-state business. This provision is burdensome and produces no tangible benefit to the Commonwealth because of the reciprocity agreements the Commonwealth has with adjoining states. This statute, if not repealed, encourages other states to cancel their reciprocity agreements with the Commonwealth. In the past year, we have already seen what happens when that occurs when the State of New Jersey threatened to terminate the reciprocity agreement with the Commonwealth. Therefore, in the near future, I will be introducing legislation to repeal the reporting requirements for 1099-MISC income paid to non-residents.

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