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A09950
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2413
Session of
2018
INTRODUCED BY GREINER, RYAN, FEE, MILLARD, DUNBAR, COX,
LAWRENCE, PICKETT, M. QUINN, WHEELAND AND ZIMMERMAN,
MAY 7, 2018
REFERRED TO COMMITTEE ON FINANCE, MAY 7, 2018
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, further providing for
definitions, for withholding tax requirement for nonemployer
payors, for information statement for nonemployer payors, for
payor's liability for withheld taxes, for withholding on
income and for annual withholding statement, providing for
information statement for lessors, for time for filing
lessees' returns, for payment of taxes withheld on lessors,
for lessee's liability for withheld taxes and for lessee's
failure to withhold and further providing for requirements
concerning returns, notices, records and statements and for
additions, penalties and fees. in personal income tax,
further providing for tax withheld, for withholding tax
requirement for nonemployer payors, for information statement
for nonemployer payors, for information statement for payees,
for time for filing payor's returns, for payment of taxes
withheld for nonemployer payors, for liability for withheld
taxes, repealing provisions relating to payor's liability for
withheld taxes, further providing for bulk and auction sales
and transfers, notice, repealing provisions relating to
payor's failure to withhold, providing for annual withholding
return, further providing for amount of withholding tax and
for treatment of nonresident partners, members, or
shareholders, repealing provisions relating to withholding on
income and to annual withholding statement, further providing
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for requirements concerning returns, notices, records and
statements, for interest and for additions, penalties and
fees.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 316 of the act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971, is amended by
adding a definition to read:
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:
"Income from sources within this Commonwealth." For purposes
of nonemployer withholding, as defined in section 301(k)(2).
* * *
Section 2. Sections 316.2, 317.1, 320.1, 324.4 and 324.5 of
the act, added October 30, 2017 (P.L.672, No.43), are amended to
read:
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 aggregate payments of $5,000 or more of income
from sources within this Commonwealth described in section
303(a)(1) or (2) during the calendar year to either a
nonresident individual or [an entity] a limited liability
company that is disregarded [under section 307.21] for Federal
income tax purposes that has a nonresident individual member;
and
(2) is required [under section 335(f)(1) to file a copy of
form 1099-MISC with the department regarding the payments] to
make a form 1099-MISC return to the Secretary of the Treasury of
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the United States with respect to those payments;
shall deduct and withhold from the payments an amount equal to
the [net] amount of the payments required to be reported on the
form 1099-MISC multiplied by the tax rate specified under
section 302(b).
(a.1) For purposes of determining nonemployer withholding on
a payment to a payee that relates to business engaged in, or
services performed both within and without this Commonwealth,
income from sources within this Commonwealth with respect to
that payment will be determined by either multiplying the
payment times the ratio of days spent in this Commonwealth
engaging in business or performing services in this Commonwealth
to which the payment relates over total days spent engaging in
business or performing services everywhere to which the payment
relates or using any other method that results in a fair and
equitable determination of income from sources within this
Commonwealth.
(b) Withholding of tax by payors is optional and at the
discretion of the payor with respect to payees who receive
payments of income from sources within this Commonwealth of less
than $5,000 annually from the payor. If a payor is not able to
determine whether aggregate annual payments of income from
sources within this Commonwealth to a payee will be $5,000 or
more at the time of the first payment each calendar year, the
payor shall begin to withhold tax once aggregate annual payments
of income from sources within this Commonwealth to the payee
reach $5,000. The payor will not be required to withhold tax on
payments made prior to that time.
(c) This section shall not apply to payments made by a payor
to a payee if the payor is:
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(1) The United States or an agency or instrumentality
thereof; or
(2) The Commonwealth or an agency, instrumentality or
political subdivision thereof.
(c.1) A payee receiving payments of income from sources
within this Commonwealth that are required to be reported on a
form 1099-MISC return to the Secretary of the Treasury of the
United States shall provide the payor on a form prescribed by
the department the information necessary to determine the amount
of tax to withhold, including classification of payee, state of
residence of individual or member and amount of income upon
which to withhold tax when activity takes place within and
without this Commonwealth. If the payee fails to provide the
required information and the payor reasonably believes that
withholding is required under this section, the payor shall
withhold tax on 100% of each payment until the payee provides
the required information. The payor will not be required to
adjust tax withheld on any payment made prior to receipt of the
required information.
(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.--(a) 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 and the department 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 and the department on or before [March 1
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of the year succeeding the calendar year.] the date the payor is
required to furnish the payee and the Secretary of the Treasury
of the United States with a copy of the form 1099-MISC for
Federal income tax purposes.
(b) If the form 1099-MISC filed by the 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 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.
(c) If a payor files a corrected form 1099-MISC with the
Secretary of the Treasury of the United States that would change
the income from sources within this Commonwealth of a payee, or
if a payor erroneously reports income from sources within this
Commonwealth or the amount of tax withheld, the payor shall file
a corrected form 1099-MISC with the department.
(d) If the payor is required to perform electronic filing
for Pennsylvania employer withholding purposes, form 1099-MISC
shall be filed electronically with the department. The payor may
file form 1099-MISC electronically in other instances.
Section 320.1. Payor's Liability for Withheld Taxes.--Every
payor required to deduct and withhold tax under section 316.2 is
hereby made liable for such tax. In determining the amount of
tax withheld, a payor may rely upon the information that a payee
provides on the form prescribed in section 316.2(c.1). 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
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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 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.] Every lessee of Pennsylvania real estate
who meets the following requirements shall deduct and withhold
from each lease payment an amount equal to the amount of the
payment required to be reported on the form 1099-MISC multiplied
by the tax rate specified under section 302(b):
(1) makes aggregate lease payments in the course of a trade
or business to a lessor that is a nonresident individual,
nonresident individual of a single member limited liability
company classified as a disregarded entity for Federal income
tax purposes, nonresident trust subject to this tax and a
nonresident estate in the amount of $5,000 or more during the
calendar year; and
(2) is required to make a form 1099-MISC return to the
Secretary of the Treasury of the United States with respect to
those payments.
(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).] A
lessor receiving payments to which this section applies shall
provide the lessee on a form prescribed by the department the
information necessary to determine the amount of tax to
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withhold, including classification of lessor, state of residence
of individual, member or entity and amount of rental income upon
which to withhold tax. If the lessor fails to provide the
required information and the lessee reasonably believes that
withholding is required under this section, the lessee shall
withhold tax on 100% of a lease payment. The lessee will not be
required to adjust tax withheld on any payment made prior to
receipt of the required information.
(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. If a
lessee is not able to determine whether aggregate annual
payments to a lessor will be $5,000 or more at the time of the
first payment each calendar year, the lessee shall begin to
withhold tax once aggregate annual payments to a lessor reach
$5,000. The lessee will not be required to withhold tax on
payments made prior to that time.
(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
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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 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.]
(a) Every lessee required to deduct and withhold tax under
section 324.4 during the calendar year shall furnish to the
lessor and the department a copy of form 1099-MISC. A copy of
form 1099-MISC required by this section for each calendar year
shall be forwarded to the payee and the department on or before
the date the payor is required to furnish the payee and the
Secretary of the Treasury of the United States with a copy of
the form 1099-MISC for Federal income tax purposes.
(b) If the form 1099-MISC filed by a lessee with the
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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 form 1099-MISC, is
reflected thereon, the lessee 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 lessee.
(c) If a lessee files a corrected form 1099-MISC with the
Secretary of the Treasury of the United States that would change
the amount of lease payments from Pennsylvania real estate, or
if a lessee erroneously reports lease payments from Pennsylvania
real estate or the amount of tax withheld, the lessee shall file
a corrected form 1099-MISC with the department.
(d) If the lessee is required to perform electronic filing
for Pennsylvania employer withholding purposes, the form 1099-
MISC shall be filed electronically with the department. The
lessee may file the form 1099-MISC electronically in other
instances.
Section 3. The act is amended by adding sections to read:
Section 324.6. Information Statement for Lessors.--Every
lessor receiving a copy of form 1099-MISC from a lessee under
section 324.4 shall file a duplicate of such information return
with the lessor's State income tax return.
Section 324.7. Time for Filing Lessees' Returns.--Every
lessee required to deduct and withhold tax under section 324.4
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.
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Section 324.8. Payment of Taxes Withheld on Lessors.--Every
lessee withholding tax under section 324.4 shall pay over to the
department or to a depository designated by the department the
tax required to be deducted and withheld under section 324.4.
The time for paying over the withheld tax shall be as set forth
in sections 319(a)(1), (2), (3) and (4).
Section 324.9. Lessee's Liability for Withheld Taxes.--Every
lessee required to deduct and withhold tax under section 324.4
is liable for such tax. In determining the amount of tax to
withhold, a lessee may rely upon the information that a lessor
provides on the form prescribed in section 324.4(b). 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 lessee. All taxes deducted and
withheld from lessors pursuant to section 324.4 or under color
of section 324.4 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 324.10. Lessee's Failure to Withhold.--If a lessee
fails to deduct and withhold tax as prescribed under section
324.4 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 lessee, but the lessee 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 4. Section 335(f) of the act, amended October 30,
2017 (P.L.672, No.43), is amended and the section is amended by
adding a subsection to read:
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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
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.
(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:
"Payee." The person receiving the payments subject to
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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.]
(f.1) (1) Except in instances where sections 317, 317.1 and
324.5 apply, any payor who makes aggregate payments of five
thousand dollars ($5,000) or more of income from sources within
this Commonwealth, as defined in section 301(k), that fall
within any of the eight classes of income enumerated in section
303(a) to a payee who is an individual, an entity classified as
a partnership for Federal income tax purposes, or an entity
classified as a disregarded entity for Federal income tax
purposes, and is required to make a form 1099-MISC return to the
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. The payor shall not be required to report State
income and State tax withheld information, currently boxes 16
through 18 on form 1099-MISC.
(2) A copy of form 1099-MISC required by this section for
each calendar year shall be forwarded to the department on or
before the date the payor is required to furnish the Secretary
of the Treasury of the United States with a copy of the form
1099-MISC for Federal income tax purposes.
(3) 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. The
payor may file the form 1099-MISC electronically in other
instances.
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(4) If a payor timely furnishes the department with a
correct copy of the form 1099-MISC, the department is prohibited
from seeking any information regarding State income and State
tax withheld information, currently boxes 16 through 18 on form
1099-MISC, from the payor. The department shall obtain that
information only from the payee.
(5) 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:
"Payee." A person receiving a payment or payments subject to
information reporting 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." A person required to file a form 1099-MISC with the
Secretary of the Treasury of the United States reporting a
payment or payments of income from sources within this
Commonwealth, as defined in section 301(k), that fall within any
of the eight classes of income enumerated in section 303(a).
* * *
Section 5. Section 352(f), (h) and (j) of the act, amended
October 30, 2017 (P.L.672, No.43), are amended to read:
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.
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(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)]
317.1, 324.5 or 335(f.1) who wilfully furnishes a false or
fraudulent form or who wilfully fails to file the form in the
manner, at the time and showing the information required under
section [335(f)] 317.1, 324.5 or 335(f.1) 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)] 317.1, 324.5 or 335(f.1) 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)] 317.1, 324.5 or 335(f.1) 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
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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, payor or lessor and paid over to the department under
section 319 [or], 319.1 or 324.8 is not paid on or before the
due date prescribed for filing the quarterly return under
section 318 [or], 318.1 or 324.7, 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 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, 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
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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 6. This act shall take effect immediately.
Section 1. Sections 312, 316.2, 317.1, 317.2, 318.1 and
319.1 of the act of March 4, 1971 (P.L.6, No.2), known as the
Tax Reform Code of 1971, amended or added October 30, 2017
(P.L.672, No.43), are amended to read:
Section 312. Tax Withheld.--(a) The amount withheld under
[section 316.1] sections 316.1 and 316.2 shall be allowed to the
taxpayer from whose income the tax was withheld as a credit
against the tax imposed on him by this article.
(b) The credit under subsection (a) shall be allowed for the
person's taxable year in which the tax was withheld.
Section 316.2. Withholding Tax Requirement for Nonemployer
Payors and Lessees.--(a) To the extent not already required to
withhold tax on payments under section 316.1, a person that
makes the following types of payments, who is also required to
issue or voluntarily issues Federal form 1099-MISC for such
payments shall deduct and withhold from the payments an amount
equal to the amount of the payment required to be reported on
the Federal form 1099-MISC multiplied by the tax rate specified
under section 302(b):
(1) [makes] payments totaling $5,000 or more of income from
sources within this Commonwealth described in section 303(a)(1)
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or (2) during the calendar year to either a nonresident
individual or an entity that is classified as a disregarded
entity 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
political subdivision thereof.
(d) The department may prescribe regulations to implement
and clarify the withholding requirement set forth in this
section.] is owned by a nonresident individual; or
(2) lease payments totaling $5,000 or more for real estate
in this Commonwealth to a nonresident lessor either directly or
indirectly through a management company or other agent
authorized to receive the lease payments on behalf of the
nonresident lessor.
(b) Withholding of tax by a payor or lessee is optional and
at the discretion of a payor or lessee with respect to payments
of income from sources within this Commonwealth of less than
$5,000 annually.
(c) If at the time of a payment a payor or lessee cannot
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reasonably expect total payments of income from sources within
this Commonwealth to a payee or lessor to be at least $5,000
during the calendar year, the payor or lessee shall begin to
withhold tax once the payor or lessee reasonably expects that
total payments of income from sources within this Commonwealth
to the payee will be at least $5,000 during the calendar year.
The payor or lessee will not be required to withhold tax on
payments made prior to that time.
(d) A management company acting as an agent for a lessee may
withhold and remit the tax on behalf of the lessee. A management
company that withholds the tax on behalf of the lessee becomes
jointly and severally liable with the lessee for the tax. A
lessee is not relieved from liability for withholding tax if the
management company fails to withhold and remit the tax.
(e) A management company, agent or payee that withholds its
compensation from a payment from a lessee or other person shall
remit to the lessor or payor with the balance of the payment any
tax required to be withheld under this section. If no portion of
the payment is remitted to the lessor or payor, the management
company, agent or payee must remit the amount of the withheld
tax to the lessor or payor within thirty (30) days of receipt of
the payment from the lessee or other person. The lessor or payor
must remit and report the tax in accordance with sections 318.1
and 319.1.
(f) Except as provided in subsection (g), in instances where
a payment to a payee is attributable to business engaged in, or
services performed both within and without this Commonwealth,
the portion of the payment constituting income from sources
within this Commonwealth for withholding purposes shall be
determined by multiplying the payment times the fraction of time
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spent in this Commonwealth engaging in business or performing
services in this Commonwealth to which the payment relates over
total time spent engaging in business or performing services
everywhere to which the payment relates. Time spent shall be
measured in days, hours or any other unit of time that results
in a fair and equitable determination of income from sources
within this Commonwealth.
(g) If the payment is based upon volume of activity,
including commissions of a salesman, the portion of the payment
constituting income from sources within this Commonwealth would
be apportioned based upon the volume of activity within and
outside this Commonwealth.
(h) (1) A payor or lessee is not required to withhold the
tax under this section if the payee or lessee provides a
certification that:
(i) the payee or lessor is a resident of this Commonwealth;
or
(ii) the payee or lessor is not subject to tax under this
article.
(2) The certification may be on a form prescribed by the
department or a substitute form as long as the form contains the
information necessary for the payor or lessee to determine
whether withholding is required, and the payee or lessor signs
the form.
(i) If a payment relates to business engaged or services
performed within or outside this Commonwealth, a nonresident
payee shall provide the payor with the portion of the payment
that is attributable to business engaged or services performed
within this Commonwealth as determined in accordance with
subsections (f) and (g).
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(j) If a payee or lessor fails to provide the required
information under subsection (h) or a payee fails to provide the
required information in subsection (i), the payor or lessee
shall withhold tax on one hundred per cent of each payment until
the payee or lessor provides the required information. The payor
or lessee may not be required to adjust the tax withheld on any
payment made prior to receipt of the required information.
(k) A payor or lessee that, in good faith, relies upon
information that a payee or lessor provides under subsections
(h) and (i) may not be subject to the imposition of a tax under
section 320, interest and penalty under this article if the
department determines that the payee or lessor was subject to
withholding under this section or the payee erroneously provided
the payor with the amount of a payment constituting income from
sources within this Commonwealth.
(l) The department may promulgate regulations necessary to
implement the withholding requirements of this section.
(m) This section shall not apply to payments made by a payor
or lessee who is:
(1) the United States or an agency or instrumentality
thereof;
(2) the Commonwealth or an agency, instrumentality or
political subdivision thereof; or
(3) a lessee under a residential lease.
(n) For purposes of this section, the term or phrase:
"Lease payment." Includes, but is not limited to, rents,
royalties, bonus payments, damage payments, delay rents and
other payments that are made pursuant to a lease other than
compensation derived from intangible property having a taxable
or business situs in this Commonwealth. Classification as a
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