Pennsylvania ACT 32 FAQs

What makes an employee address unacceptable.

The most common address flaw is the use of a Post Office Box in the employee demographic. In addition, if an employee record contains both a street address and a P.O. Box, this could prove difficult to code if the zip code applies to the P.O. Box instead of the address. ECCA has noted several instances where address lines have been transposed. ECCA has also noted situations where no address data is archived.

Software Changes To The Payroll System

Based on conversations with several clients and consideration of other factors, it may be necessary to initiate changes to the employee demographic section of the Payroll software to include a domicile address and a mailing address. These enhancements are in the planning stage and could be announced in a future upgrade.

Certificate of Residency (COR)

It should be noted that completed COR’s which will be provided by ECCA to our clients are to be archived at the employer’s office. The information that is on the COR is not unlike a Federal Form W-4 or I-9 and would be stored in the employee HR file. Once this preliminary process is accomplished, it is also important to note that in the future, the employer will have to administer to payroll changes. In the event that the employer has a new hire, a new COR will have to be completed. Also, if an employee moves, a new COR will have to be completed. This information will have to be updated in the employee demographic section of the payroll software by the employer.

Withholding Rules

There are only two tax rates that an employer must consider when calculating the proper amount of tax to withhold.

The employees resident tax rate or,
The non-resident tax rate for the jurisdiction where the business is located

If a community where a person works has a nonresident tax, and that tax rate is higher than the tax rate where that person lives, the community where he or she works is entitled to the difference

Example One – If I live in Millcreek Township, there is a 1.00% EIT rate and I work in Erie City with a non-resident tax rate of 1.18 %. My employer should withhold 1.18 %. Millcreek Township would receive 1.00% and Erie City would receive 0.18%.

Example Two - If I live in Erie City, there is a 1.18% EIT rate and I work in Summit Township with a non-resident tax rate of 1.00 %. My employer should withhold 1.18 %. Erie City would receive 1.18% and Summit Township would receive 0.0%.

Example Three - If I live in North East Township, there is a 1.0% EIT rate and I work in Harborcreek Township with a non-resident tax rate of 1.00 %. My employer should withhold 1.00%. North East Township would receive 1.00% and Harborcreek Township would receive 0.0%.

How are Employees Affected

It may be helpful to advise employees that their local income tax withholding may change beginning in 2012; particularly if you did not withhold local taxes for jurisdictions outside of the locality in which your business is located.