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House of Representatives
Session of 2019 - 2020 Regular Session


Posted: January 3, 2019 12:38 PM
From: Representative Keith J. Greiner
To: All House members
Subject: Non-Resident Withholding Fixes, 1099-MISC
In the near future, I intend to introduce former House Bill 2413, legislation to clarify and streamline the recent changes made to withholding of non-resident income for personal income tax purposes.

As part of the 2017-18 budget, Act 43 of 2017 added a new and complicated withholding obligation for Pennsylvania businesses. Beginning Jan. 1, 2018, certain payors of Pennsylvania-source income and lessees of Pennsylvania real estate of at least $5,000 to nonresident individuals and single-member LLCs that have a nonresident individual member are required to withhold Pennsylvania personal income tax on these payments.

Given numerous ambiguities and the short implementation time, this added burden of determining the source of income and payments to nonresident vendors is proving to be a challenge for businesses in Pennsylvania. The additional administrative burden and compliance costs to businesses is significant, and taxpayers have had very limited time to comply with the new requirement. While the Department of Revenue has taken some steps to mitigate the numerous difficulties encountered by Pennsylvania businesses, there are still legislatively necessary clarifications and reforms.

In response, my legislation will make various technical fixes to address some of the more ambiguous language in Act 43 and addresses issues that have arisen during implementation of the current statute. For example, it will establish a methodology for determining how much tax to withhold on payments attributable to services performed both within and outside Pennsylvania, and how to withhold when the aggregate amount of payments is not known. Furthermore, my bill will correct omissions in the current law, including reporting and remittance rules for withheld tax on lease payments. Finally, the bill will simplify compliance by requiring the Department of Revenue to issue an information form to facilitate payor withholding and reduces payor liability.

I hope you will join me in co-sponsoring this important legislation. For more information, please contact Tierna Tuckey at ttuckey@pahousegop.com

Introduced as HB926