Pennsylvania Act 32

Information about Earned Income Tax returns.

In 2008 Pennsylvania passed a law (Act 32) that changes the way Earned Income Tax (EIT) is collected and distributed by both municipalities/school districts and employers in all of Pennsylvania. Act 32 requires that all municipalities and school districts in each county have only one tax collector for EIT beginning in January 2012. Employers must fully implement the changes contained in Act 32 beginning on January 1, 2012.

ECCA has been performing the necessary procedures to insure that our payroll processing software meets the requirements being set forth by the Act 32 changes. There are several important steps you must complete to properly comply with Act 32 and for us to assist you in initiating these changes. ECCA will provide assistance to facilitate the updating of your current employee roster with the appropriate tax information at no additional cost to you.

First, ECCA will implement a preliminary test of your employee demographic data and produce a report for your review which documents employee addresses which are incomplete or incapable of being automatically coded with the correct Political Subdivision Code (PSD). You will need to update these records. This report will be sent in separate cover.

Second, we will populate the data assembled and print “Certificate of Residency” Forms (COR) for all your current employees to review and sign. We plan to produce the COR Forms and forward them to you in October, 2011.

Third, we will then automate the import of the correct PSD codes to your employee demographic data to provide a seamless transition to implementation of the tax law change. Once the updating of your current employee roster is completed you will need to keep the information current in the case of an employee change of address or a new hire. This is the process to follow.

You must obtain “Certificate of Residency” Form (COR) from each of your Pennsylvania based employees. For an example of the certificate, please see http://www.newpa.com/webfm_send/1933. Upon completion of the COR, the employer will use the information provided to determine the appropriate PSD Code and Resident EIT Rate associated with that employee’s domicile address.

The assigned PSD codes for the Pennsylvania local jurisdiction can be found at http://munstatspa.dced.state.pa.us/FindLocalTax.aspx. You will then populate the employee record with the PSD Codes so that the correct withholding tax can be calculated with each processed payroll.

If you would like to opt out of ECCA’s offer to produce employee COR’s and import correct PSD codes or if you have any additional questions regarding this matter, please contact your customer service representative