Pennsylvania Act 32. What you need to do

Transcription

1 Pennsylvania Act 32 Pennsylvania Act 32 amends the Local Tax Enabling Act, to consolidate the collection of Earned Income Tax (EIT) on a countywide basis, establishing Tax Collection Districts (TCD) in each county, except Philadelphia to which Act 32 does not apply. This will reduce the number of collection districts from 560 to 69, and the number of tax collectors to 21. These changes will eliminate a split collector for the municipal and the school district earned income tax. The requirements are effective January 1, 2012, and if specified a Tax Collection District (TCD) can implement the requirements in Chester, Lancaster, Lebanon, and Wyoming counties have chosen to implement Act 32 in 2011, though Lancaster, Lebanon, and Wyoming counties have decided to do this on a voluntary basis in Employers will be required to compare the employees tax rate where they live and where they work, withholding at the higher of the two rates. To help determine the proper rate to withhold, employers are required to obtain the Local Earned Income Tax Residency Certification Form from the employee. This form can be obtained from the Pennsylvania website or from the PayChoice Support site, in the Documentation section. Each municipality is assigned a Political Subdivision (PSD) code to identify the municipality and its corresponding school district. The Political Subdivision (PSD) code for both the work and resident municipalities will be reported to the tax collector when remitting tax returns. What you need to do Obtain from all Pennsylvania employees the Local Earned Income Tax Residency Certification Form, to determine the correct resident and work location Political Subdivision (PSD) codes. After applying the June 2011 PayChoice release, enter the resident Political Subdivision (PSD) code in the PA LOCAL RES field (see Entering the Resident and Non- Resident Tax Codes below). Review the tax code entered in Local Tax CD field on the Employee Tax and Deduction screen (F5) to determine that the work location tax code is correct. June 23,

2 Changes in PayChoice The Tax Authority has been modified to include fields for the Political Subdivision code, Tax Collector code, Early Act 32 indicator, and the Muni/SD code. PSD - The Political Subdivision (PSD) assigned to the municipality. Tax Collector code. o This will be used by PayChoice to identify the Tax Collector name and address for used for this local tax authority. This will reduce the maintenance from PayChoice should the address of the Tax Collector change. o This field will also be used as a way of identifying which locals are tied back to a tax collector for EFT payments, electronic filing as well as yearend magnetic media purposes.) o A new Tax Authority record will be created for each Tax Collector containing the name, address, phone and contact. Early ACT 32 indicator o The Yes/No indicator that the tax authority has elected to adopt the provision of ACT 32 prior to January 1, o This is a temporary switch using the effective date entered, as all of Pennsylvania municipalities and counties will have to adopt ACT 32 starting January 1, Muni/SD code o An internal PayChoice field used auditing purposes. June 23,

3 Entering the Company Tax Id The Company Tax ID screen contains the Tax Authority code associated with the tax codes that are used, this is not a change from the current practice. The code entered in this field should be the authority for the work location; the resident location is not entered on this screen. June 23,

4 Entering the Resident and Non-Resident Tax Codes The Employee Tax and Deduction screen (F5) has been modified to include the field PA LOCAL RES when the Local Tax CD field contains a Pennsylvania local tax code. PayChoice has added new codes to the system to be used for the resident and non-resident tax, along with renaming all of the codes to indicate in the description RES for the resident tax codes and NR for the non-resident tax codes. The employee work tax code is entered in the Local Tax CD field, and should always contain a NR tax code. The employee resident tax code is entered in the PA Local Res field, and should always contain a RES tax code. June 23,

5 The procedure to lookup a local tax code has been enhanced for both the Local Tax CD field and the PA Local Res field. The F10 to Zoom key will bring up the lookup table which allows display order to change when pressing Alt-O. The display views available are Description, PSD Code, Tax Authority, and Tax Code. Philadelphia Employers will not be required to populate the PA Local Res field, and will continue to use PHLN (non-residents) or PHLR (residents) on the employee F5 screen in field Local Tax CD. How PayChoice Will Calculate the Tax PayChoice will calculate the higher rate of the codes entered, beginning January 1, 2012 for all Pennsylvania localities. If a Tax Authority has the Early Act 32 indicator set to Yes in 2011, the calculation of the higher rate will begin on July 1, The calculation will occur when running: The preprocess A regular payroll Data entry on both the employee s payment screen (pressing ALT V) and the employee s adjustment screen Computing a manual check June 23,

6 Tax Transfers Tax Transfers if employee Resident Political Subdivision (PSD) code changes: The taxable wages and tax withheld are being accumulated on the work location code; they are not stored on the employee PA LOCAL RES PSD code. Tax transfers for the PA LOCAL RES code are not available in PayChoice at this time, with development scheduled for later in When a Political Subdivision (PSD) code is missing or incorrect, a correction will need to be entered on the Employee Tax and Deduction screen (F5) by entering the correct Political Subdivision (PSD) code and manually adjusting the taxes on LC code. Employee moves mid quarter/year When an employee moves within the calendar quarter, or mid-year, the employee will not appear on the Quarterly Local Wage Report twice, with wages & tax relative to each Resident Political Subdivision (PSD) code. The Political Subdivision (PSD) code at the time the Quarter is cut will display on the report with the total Quarterly wages and tax for that work location. PayChoice will development a change to the reporting, as required, upon clarification of the collector reporting requirements. June 23,

7 Reports Reports changed to show the Political Subdivision (PSD) codes include the Employee Personnel list and the Employee Maintenance list. For both of these reports, the Political Subdivision (PSD) code will be displayed next to the Local Tax code and PA local resident tax code if one exists The Quarterly Local Tax report that gets produced with the quarterlies will print the Tax Collector name at the top of the report under the Tax Authority name. The Political Subdivision (PSD) code for the local tax authority being printed will also be printed next to the authority name. The Political Subdivision (PSD) code for each employee will be printed with the employee static information. The employee View Browse has been changed to show the Political Subdivision (PSD) code next to the Local Tax Code and display the Res Local Tax code when one is setup for the employee along with its Political Subdivision (PSD) code. The Quarterly Calculations program, beginning with the 3 rd quarter of 2011, will use the higher rate between the work and resident local when calculating local wage variances when the tax authority indicates a Yes in the Early Act 32 field. All Pennsylvania localities will use this calculation beginning January 1, The Ceridian (CTS) and MasterTax (MTS) quarterly files have been changed to include the Resident and Work Political Subdivision (PSD) code in the PA Local 602 record. The introduction of the Tax Collector code required many of the PayChoice programs to be changed in order for the correct name and address to print. These include Laser Checks (all versions) Reprint Checks Payroll Journal and Register ARP report EOD Payment Checks EFT Payments June 23,

8 EFT Payments Currently, Lancaster County Tax Collection Bureau has adopted EFT credit payments, with and expectation that other collection districts will add the capability over time. The payment record needed is the EFT Credit format with a basic 7 addendum record. The payments for multiple local codes will be paid to the same Tax Collector but those payments will remain as separate amounts and not be combined in the report or the file. All of the Pennsylvania local tax authorities have been modified to allow for EFTPS payments, with the collectors (PAT001 PAT021) as Financial Agents. The State EFTPS screen has been modified to link up the Local Tax Authority with the Tax Collector to determine which Financial Agent can be selected. June 23,

9 Examples of EFT Processing In this example the local tax code was PA0274. On the Electronic Tax Payment Screen PAT001 will be the valid Tax Payment type and Send Payments to options. June 23,

10 Once setup, the payment will be processed as currently done today in PayChoice, additional changes were not needed. In the State EFT screen there will potentially be multiple payments for the same tax collector from the different tax authorities. These can all be tagged into the same payment file where they will be treated as individual payment lines in the same file June 23,