Slideshow describing ACT 32 for PA Local Taxes, and what employers must do to comply. Also covers how Sentric is handling these changes for their affected clients.

1. Pennsylvania Local Tax
Reform -- Act 32
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2. What - When - Why?
On July 2, 2008 the Pennsylvania legislature
enacted an amendment of the Local Tax Enabling
Act, Act 511 of 1965
Mandatory compliance is effective January 1, 2012.
With the goal of consolidating and simplifying the
collection of Local Earned Income taxes on a
countywide basis.
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3. Current Local Tax Collection System
Fragmented - Unstructured
560 collectors collecting for 2,500+ localities
Related municipalities and school districts
remitting to separate collectors
Manual payment processing
Quarterly/Annual Returns not standard and filed
manually
Only addresses the work site tax
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4. Streamlined Improvements with Act 32
Standardization of forms and definitions
Consolidation of the Tax Collectors
560 reduced to about 66
Districts can still set their EIT rates
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5. PA Act 32 - New Terms
• Pennsylvania’s Department of Community and Economic
Development – the overseeing body of Act 32
DCED
• Tax Collection District – contains municipalities and school
districts within a defined area
TCD
• Political Subdivision – the municipalities and school districts
PSD
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6. PA Act 32 Improvements
STREAMLINED: 21 Collectors with only 69 Tax Collection
Districts (TCDs)
STANDARDIZED: Political Subdivision (PSD) Codes-6 digits
» First 2 digits represent the TCD
» Second 2 digits represent the School District
» Third/final 2 digits represent the Municipality
STREAMLINED: Municipalities School Districts will share TCD
EFFICIENCY: Payment processing will be electronic for faster
and more accurate processing
Quarterlies and W2s filed electronically
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7. PA Act 32 – Employer Requirements
Registration
Register with TCD where business is located
Paper vs. Online registration
Multiple worksite employers
• Can consolidate PA sites to remit/file to one TCD.
• Must file monthly and electronically
• Must send notification to all other affected TCD’s alerting to
which TCD you are remitting/filing.
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8. PA Act 32 -Employer Requirements
Employee Information
Employees must complete Local Residency Form
 Survey all active employees
 Provide form to every new hire and employees who
change address
 Employer must keep original on file, do not send to
collector
Withholding for all employees is MANDATORY
Your Workforce. In Focus.

9. PA Act 32 – Employer Requirements
Employee Information
State provided spreadsheet to assist employers to
help employees to determine PSD codes
If an employee cannot determine their PSD code,
recommendation is to use the work location non-
resident PSD code to withhold the minimum 1%
Your Workforce. In Focus.

10. Employer Requirements Summary
Step 1: Step 2: Gather Step 3: EE
Employer Employee Withholding
Registration Information
Determine where
Be proactive and
business is Distribute
set up employees
located or where Residency Forms
now with current
you are going to to all employees
tax codes
report
Register with the Sentric will convert
Assist in
TCD where your old codes to PSD
determining PSD
business is codes effective
codes
located 1/1/2012
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11. Act 32 Payment Cycle
Tax Withheld
from
Employees
Employee
Money is
files annual
remitted to
return with
work location
Resident
TCD
TCD
TCD collector Work location
forwards TCD collector
money to sends to
municipality Resident
PSD TCD
Your Workforce. In Focus.

12. PA Act 32 - Compliance with Sentric
All PSD codes are currently available in our system
Developed a program that converts old PA-xxxx
codes to PSD codes on all employees effective
01/01/2012.
System logic will compare work location PSD to
resident location PSD to withhold higher rate as
required by Act 32
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13. Sentric’s PA Act 32 Services
TaxCheck/TaxNotice Services
AutoTax Services
Quarterly and W-2 Processing
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14. PA Act 32 - FAQs
Is the LST (Local Who will send the
Services Tax) included in residency certification
Act 32? form to my employees?
No. The Local Services Tax The employer is responsible
falls under its own Act. for surveying, collecting and
keeping the employees’ PSD
certification information.
Your Workforce. In Focus.

15. PA Act 32 - FAQs
When are we required Am I required to notify
to implement Act 32? my employees of the
Act 32 requirements?
Act 32 is effective
1/1/2012. No, notification to
employees is not
required.
Your Workforce. In Focus.

16. PA Act 32 - FAQs
What if an employer has out-of-state employees
working in PA?
The employer must withhold at the work location’s
established non-resident rate
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17. PA Act 32 - FAQs
What if I refuse to comply with Act 32’s mandated
requirements?
Employers can be fined up to $25,000
and can be sentenced to up to 2 years
in jail.
Your Workforce. In Focus.

18. Reference Documents & Links
PSD Codes
Interactive TCD Map
TCD and Collector Listing
Residency Certification Form
Municipal Statistics Tax Report – Address Lookup
American FactFinder – US Census Bureau
DCED Act 32 Information
DCED LST Related Information
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19. Questions ?
Disclaimer: These slides are for educational purposes only. They are not intended to be accounting advice.
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