Press Releases

New Law Generates Millions for School Districts and Municipalities

HARRISBURG, Pa. – Pennsylvania Governor Edward G. Rendell, signed Senate Bill 1063 into law Wednesday, July 2 in favor of a more streamlined local income tax collection system. The bill will create a more effective and cost-efficient tax collection system, and proponents believe this law could generate millions of dollars of uncollected revenues for school districts and municipalities.

Senate Bill 1063, sponsored by Sens. Jane Earll (R – Erie) and Pat Browne, CPA (R – Lehigh), was heavily supported by organizations across Pennsylvania, including the Pennsylvania Institute of Certified Public Accountants (PICPA). Proponents view this as an important step in making Pennsylvania a more business-friendly environment.  According to Eric Wallace, CPA, PICPA President, “In offering a new, consolidated approach to earned income tax (EIT) collection, the bill will streamline processes and reduce paperwork for employers, provide accountability and oversight to ensure that tax revenue for every employee in Pennsylvania is withheld and promptly remitted to the proper municipalities and school districts.”

Pennsylvania is unrivaled in the number of jurisdictions levying local taxes – almost 2,900 - more than all other states combined.  About 560 local tax collectors are used to collect and distribute over $1.9 billion in annual revenue.  A recent Pennsylvania Economy League review estimated that as much as $237 million in earned income tax (EIT) is gone uncollected annually by municipalities and school districts. 

Bill 1063 includes a number of improvements to the current system that will alleviate such issues:

• Consolidating the EIT collection system into 69 independent tax collection districts roughly congruent with Pennsylvania’s counties, but not a function or department of county government
• Requiring that employers withhold all local income taxes imposed on the compensation of their employees and remit those taxes to only one collector, even if an employer operates in multiple counties
• Providing for more accountability, transparency, oversight, and enforcement

The bill will allow full implementation to start in 2012 with 2011 being a transition year.

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To speak with a member of PICPA about how this new legislation will impact business in Pennsylvania and what it means for the tax collection system, please contact Kathleen Miller at kmiller@picpa.org or 215-972-6188 or Jim DeLuccia at jdeluccia@picpa.org or 267-675-6255.

Founded in 1897, the Pennsylvania Institute of Certified Public Accountants is a professional association of more than 19,000 CPAs who work in public accounting, industry, government, and education. PICPA is the second-oldest state CPA organization in the United States. To find a member CPA in your area, visit our Web site at www.picpa.org and click on CPA Locator. Students and educators can visit PICPA’s specially designed site www.CPAzone.org to get the latest information about careers in accounting and the CPA profession.