Earned Income Tax Collection Consolidation Act
The Earned Income Tax Collection Consolidation Act (Act 32) of 2008 created a timeline for municipalities and school districts to consolidate the collection of earned income taxes (EITs) and local services taxes (LSTs). It also established statewide rules and regulations pertaining to withholding, remittance, distribution, reporting, oversight, and enforcement of the system.
As part of its implementation,
tax collection districts
(TCDs), which mostly correspond to county
boundaries1,
were set up. Then taxing authorities within each district
appointed representatives to form a tax collection committee (TCC). Each district’s committee was charged with determining how best to implement the new regulations. The committee would also appoint a single tax collector, from an approved list, to serve the EIT and LST collection needs of all the political subdivisions within the district.
Chester Tax Collection District to Start Tax Change a Year Early
Franklin Township is included in the Chester Tax Collection District (CTCD) and Chester’s tax collection committee has recently chosen Keystone Collections Group to serve as the earned income tax and local services tax collector for school and municipal taxing authorities within CTCD. While Act 32 allows the responsibilities of a TCD’s appointed collector to begin in 2012, the Committee has chosen to implement consolidated EIT tax collections beginning January 1, 2011.
What does this mean for Franklin Township residents who are required to pay Franklin Township’s earned income tax?
The transition from collection of EIT payments by Berkheimer Associates, the current EIT collector for the Township, is underway and affects EIT tax payments made after January 1, 2011.
- Estimated earned income tax payments for the fourth quarter of 2010 (due January 31, 2011) will be collected by Keystone Collections Group.
- 2010 earned income tax returns (due April 15, 2011) will be filed with Keystone Collections.
- Act 32 makes employers responsible for collecting and remitting the earned income tax. Employees will no longer have to pay earned income tax themselves, either through quarterly or annual payments; starting January 1, 2011, all EIT payments should be withheld from employees’ pay.
- Those who are self-employed, or otherwise work for themselves, will continue to pay estimated quarterly and annual payments themselves.
In the next few weeks, individuals and employers will receive detailed instructions and contact information from Keystone to help answer questions and provide taxpayer assistance.
To learn more about Pennsylvania’s Earned Income Tax Collection Consolidation Act, visit Department of Community and Economic Development (DCED): Act 32 — Local Earned Income Tax.
| 1 | Where school districts cross county lines, the districts and their municipalities were kept whole and included in the county where the municipalities have the greatest population. |