Pennsylvania is transitioning to a new Local Earned Income Tax collection system under Act 32, effective in 2012. The new system places additional responsibility on the employer to obtain accurate Political Subdivision codes (PSD codes) for each employee and to determine the correct tax rate for their withholding. Inaccurate withholding or reporting will result in penalties to the employer.
To avoid penalties and remain in compliance:
Be sure to keep blank copies of the Residency Certification Form on hand for your staff. Whenever you hire a new employee, or a current employee changes their address, they must complete this form for your records.
Research and record the correct PSD codes. Click here to access the DCED website where you can enter your employee's address and your company's address to discover the correct PSD Code. Just be sure your pop-up blockers are disabled!
Inform JetPay Payroll Services, formerly A D Computer, of the correct code by contacting your processor via phone, email, or fax, or by updating the code when you enter your payroll on the JetPay WebPay or PC product.
Keep completed, updated copies of the Residency Certification Form on file for every employee.
Starting in 2012, your employees' local taxes are withheld based upon the correct entry of these PSD codes. In order to avoid penalties, your compliance with PA Act 32 is essential.