[Adopted 7-20-2004 by Ord. No. 955]
This article shall be known as the "Earned Income
Tax Ordinance."
As used in this article, the following terms
shall have the meanings indicated:
A partnership, limited partnership or any other unincorporated
group of two or more persons.
The Borough Council of the Borough of Lewisburg.
Any enterprise, activity, profession or any other undertaking
of an unincorporated nature conducted for profit or ordinarily conducted
for profit whether by a person, partnership, association or any other
entity.
A corporation or joint stock association organized under
the laws of the United States, the Commonwealth of Pennsylvania, or
any other state, territory, foreign country or dependency.
The calendar year for which the tax is levied.
The place where one lives and has his/her permanent home
and to which he/she has the intention of returning whenever he is
absent. Actual residence is not necessarily domicile, for domicile
is the fixed place of abode which, in the intention of the taxpayer,
is permanent rather than transitory. Domicile is the voluntarily fixed
place of habitation of a person, not for a mere special or limited
purpose, but with the present intention of making a permanent home,
until some event occurs to induce him/her to adopt some other permanent
home. In the case of businesses or associations, the domicile is that
place considered as the center of business affairs and the place where
its functions are discharged.
Compensation, including salaries, wages, commissions, bonuses
and incentive payments whether based on profits or otherwise, fees,
tips and similar remuneration for services rendered, whether in cash
or in property, such as:
Items of remuneration received, directly or
through an agent, in cash or in property, based on payroll periods
or piecework, for services rendered as an employee or casual employee,
agent or officer of an individual, partnership, business or nonprofit
corporation, or government agency. These items include salaries, wages,
commissions, bonuses, stock options, incentive payments, fees, tips,
dismissal, termination or severance payments, early retirement incentive
payments and other additional compensation contingent upon retirement,
including payments in excess of the scheduled or customary salaries
provided for those who are not terminating service, rewards, vacation
and holiday pay, paid leaves of absence, payments for unused vacation
or sick leave, tax assumed by the employer, signing bonuses, amounts
received under employee benefit plans and deferred compensation arrangements.
Scholarships, stipends, grants and fellowships,
if services are rendered in connection therewith. When used in this
subsection, the following words have the following meanings, unless
the context indicates otherwise:
FELLOWSHIP STIPEND OR FELLOWSHIP AWARDA fixed sum of money paid periodically for services or to defray expenses to a graduate student who is enrolled in a graduate degree program at a university.
GRANT-IN-AIDFinancial support given by a public agency or private institution to an individual to further the individual's education.
POSTDOCTORAL RESEARCH FELLOWSHIP STIPEND OR POSTDOCTORAL RESEARCH FELLOWSHIP AWARDA fixed sum of money paid periodically for service or to defray expenses of an individual who has obtained a doctoral degree at a university and in conducting research at a research facility.
SCHOLARSHIPA grant-in-aid to a student.
Other forms of remuneration characterized as
taxable compensation by the Tax Reform Code of 1971, as amended, and
its implementing regulations, as amended, and any future amendments
to said Code and/or its implementing regulations.
Compensation does not include (i) periodic payments
for sickness and disability other than the regular wages received
during a period of sickness or disability; or (ii) disability, retirement
or other payments arising under workmen's compensation acts, occupation
diseases acts and similar legislation by any government; or (iii)
payments commonly recognized as old age or retirement benefits paid
to persons retired after reaching a specific age or after a stated
period of employment; or (iv) payments commonly known as public assistance,
or unemployment compensation payments by any governmental agency;
or (v) payments to reimburse actual expenses; or (vi) payments made
by employers or labor unions for employee benefit programs covering
hospitalization, sickness, disability or death, supplemental employment
benefits or strike benefits, subject to certain conditions identified
in the Tax Reform Code of 1971, as amended, and its implementing regulations;
or (vii) any compensation received by United States servicemen serving
in a combat zone; or (viii) payments received by a foster parent for
in-home care of foster children from any agency of the Commonwealth
or a political subdivision thereof, or an organization tax exempt
from Federal tax under Section 501(c)(3) of the Internal Revenue Code
of 1954, which is licensed by the Commonwealth or a political subdivision
thereof as a placement agency; or (ix) payments made by employers
or labor unions for employee benefit programs covering Social Security
or retirement; or (x) personal use of an employer's owned or leased
property or of employer-provided services.
A person, partnership, association, corporation, institution,
governmental body or unit or agency, or any other entity employing
one or more persons for a salary, wage, commission or other compensation.
Person, public employee or private agency designated by governing
body to collect and administer the tax on earned income and net profits.
The net income from the operation of a business,
profession or other activity, except corporations, after provision
for all costs and expenses incurred in the conduct thereof, be determined
either on a cash or accrual basis in accordance with generally accepted
accounting principles and practices, as defined in the Tax Reform
Code of 1971, as amended, its implementing regulations, and any subsequent
amendments to said Code and/or regulations. Net profits do not include
income which is not paid for services provided and which is in the
nature of earnings from an investment.
To constitute net profits, all of the following
must apply:
The gross profits shall be derived from one
of the following:
The marketing of a product or service to customers
on a commercial basis or from securities employed as working capital
in the business operations.
Accounts and notes receivable from sales of
products or services in the ordinary course of the business operations.
Assets which serve an operational function in
the ordinary course of business operations.
The marketing activity shall be conducted with
the manifest objective of achieving profitable operations.
The marking objective shall be conducted with
regularity and continuity and may not be limited or exclusive.
In computing net profits, a deduction will not
be allowed for any item of cost, expense or liability derived or incurred
in connection with, or attributable to any of the following:
The ownership or disposition of assets that
are held for investment purposes or otherwise serve an investment
function.
The trading in securities for personal purposes
and not for the accounts of customers.
The sale, discontinuation or abandonment of
a business or segment thereof.
Any tax imposed on, or measured by, gross or
net earned or unearned income.
An isolated or nonrecurring transaction which
is not a normal or routine business activity.
Choosing to form a partnership or other entity
or to associate with others, receiving and reporting income or gain
as the income of the partnership, entity or associates or dividing
the same among its partners, beneficial owners or associates or the
trading in securities for the benefit of shareholders, partners, members
or associates does not of itself make the income of the partnership,
entity or associates net profits.
For purposes of this section, only the following
participants in the stock, securities, options, derivatives, futures
or commodities market are engaged in marketing of a product or service
to customers:
Those who maintain or provide a market place
or facilities for bringing together purchases and sellers of these
financial investment products.
Those who are licensed to act as their customer's
agents and charge a negotiated commission for executing transactions
and do not take title to the particular portion they buy or sell.
Those who devote managerial attention to the
financial investment products holdings of others, or who employ other
persons to assist them in that management, in the capacity of a licensed
investment advisor.
Licensed dealers, including financial investment
product specialists and market makers, if the conditions in the following
subparagraphs are met:
The dealer maintains an inventory of financial
investment products with the objective of reselling his inventories
at a profit to customers or operates as a specialist or market maker.
The dealer makes market by quoting the bid and
ask prices at which he is willing to buy and sell the financial investment
products and by buying directly from or selling directly to customers.
The dealer's profits is determined in whole
or in part by a markup based on cost.
The dealer elects to inventory securities held
for resale to customers or uses the mark-to-market system of accounting.
Underwriters who facilitate initial sales of
financial investment products by acting either as licensed dealers
in a principal capacity or as brokers in an agency capacity.
When a person operates as an investor or trader
with respect to a portion of that person's activities and as a market
establishment, broker, investment counselor or dealer with respect
to the rest, this section applies only to the operations as a market
establishment, broker, investment counselor or dealer. For taxpayers
engaged in the business, profession or activity of farming, the term
shall not include:
Any interest earnings generated from any monetary
accounts or investment instruments of the farming business.
Any gain on the sale of farm machinery.
Any gain on the sale of livestock held 12 months
or more for draft, breeding or dairy purposes.
Any gain on the sale of other capital assets
of the farm.
A person, partnership, association or other entity domiciled
outside the taxing district.
A natural person.
The calendar year before the current year.
A person, partnership, association or other entity domiciled
in the taxing district.
The calendar year following the current year.
The Borough of Lewisburg, Union County, Pennsylvania.
A person, partnership, association or any other entity required
hereunder to file a return of earned income or net profits, or to
pay a tax thereon.
A tax for general revenue purposes is hereby
reimposed in the amount of 1% on earned income received and to net
profits earned by residents and nonresidents of the Borough, beginning
on the first day of January, 2004, and continuing for each taxable
year thereafter. Except as otherwise provided in Section 14 of the
Local Tax Enabling Act (53 P.S. § 6914), as amended, allowing
for crediting or deductions for duplication of taxes, in the event
the school district in which the Borough is situate shall impose,
or continue to impose, an earned income tax under the authority of
the Act on residents or businesses domiciled within the Borough during
the same year or part of year, then the tax herein imposed shall be
subject to the sharing provision from the day such duplication becomes
effective.
A.
Net profits.
(1)
Every taxpayer making net profits shall, on or before
April 15 of the current year, make and file with the officer on a
form prescribed or approved by the officer, a declaration of his estimated
net profits during the period beginning January 1 and ending December
31 of the current year, and pay to the officer in four quarterly installments,
as nearly equal as possible, the tax due thereon as follows: the first
installment at the time of filing the declaration and the other installments
on or before June 15 of the current year, September 15 of the current
year and January 15 of the succeeding year, respectively.
(2)
Any taxpayer who first anticipates any net profit
after April 15 of the current year, shall make and file the declaration
hereinabove required on or before June 15 of the current year, September
15 of the current year or December 31 of the current year, whichever
of these dates next follows the date on which the taxpayer first anticipates
such net profit, and pay to the officer in installments, as nearly
equal as possible, the tax due thereon, on or before the quarterly
payment dates which remain after the filing of the declaration.
(3)
Every taxpayer shall, on or before April 15, of the
succeeding year, make and file with the officer on a form prescribed
or approved by the officer a final return and reconciliation showing
the amount of net profits earned during the period beginning January
1 of the current year and ending December 31 of the current year,
the total amount of tax due thereon and the total amount of tax paid
thereon. At the time of filing the final return, the taxpayer shall
pay to the officer the balance of the tax due or shall make demand
for refund or credit in the case of overpayment. Any taxpayer may,
in lieu of paying the fourth quarterly installment of his estimated
tax, elect to make and file with the officer on or before January
31 of the succeeding year, the final return as hereinabove required.
(4)
The officer is hereby authorized to provide by regulation
for the making and filing of adjusted declarations of estimated net
profits, and for the payments of the estimated tax in cases where
a taxpayer who has filed the declaration hereinabove required, anticipated
additional net profits not previously declared or finds that he has
overestimated his anticipated net profits.
(5)
Every taxpayer who discontinues business prior to
December 31 of the current year, shall, within 30 days after the discontinuance
of business, file his final return as hereinabove required and pay
the tax due.
B.
Earned income.
(1)
Annual earned income tax return. Every taxpayer shall,
on or before April 15, of the succeeding year, make and file with
the officer on a form prescribed or approved by the officer a final
return showing the amount of earned income received during the period
beginning January 1 of the current year and ending December 31 of
the current year. Such final return shall also show the total amount
of tax due thereon, the amount of tax paid thereon, and the amount
of tax thereon that has been withheld pursuant to the provisions relating
to the collection at source and the balance of tax due. At the time
of filing the final return, the taxpayer shall pay the balance of
the tax due or shall make demand for refund or credit in the case
of overpayment.
(2)
Earned income not subject to withholding. Every taxpayer
who is employed for a salary, wage, commission or other compensation
and who received any earned income not subject to the provisions relating
to collection at source, shall make and file with the officer on a
form prescribed or approved by the officer a quarterly return on or
before April 30 of the current year, July 31 of the current year,
October 31 of the current year and January 31 of the succeeding year,
setting forth the aggregate amount of earned income not subject to
withholding by him during the three month periods ending March 31
of the current year, June 30 of the current year, September 30 of
the current year and December 31 of the current year, respectively,
and subject to the tax, together with such other information as the
officer may require. Every taxpayer making such returns, shall, at
the time of filing thereof, pay to the officer the amount of tax shown
as due thereon.
C.
Death of taxpayer. In the event of the death of a
taxpayer during a taxable period, his personal representative shall
file his return on or before the 15th day of April of the year following
the date of death and on or before such date shall pay any tax due
from such deceased taxpayer under this article or demand refund in
the case of overpayment.
D.
Guardian of taxpayer. Should a guardian of the estate
be appointed for a taxpayer such guardian shall be imputed with the
same duties and responsibilities as the taxpayer would have regarding
the reporting and paying of taxes under this article.
A.
Every employer having an office, factory, workshop,
branch, warehouse or other place of business within the Borough who
employs one or more persons, other than domestic servants, for a salary,
wage, commission or other compensation, who has not previously registered,
shall, within 15 days after becoming an employer, register with the
officer, his/her name and address and such other information as the
officer may require.
B.
Every employer having an office, factory, workshop,
branch, warehouse or other place of business within the Borough who
employs one or more persons, other than domestic servants, for a salary,
wage, commission or other compensation shall deduct at the time of
payment thereof, the tax imposed by this article on the earned income
due to his/her employment, and shall, on or before April 30 of the
current year, July 31 of the current year, October 31 of the current
year and January 31 of the succeeding year, file a return and pay
to the officer the amount of taxes deducted during the preceding three
month period ending March 31 of the current year, June 30 of the current
year, September 30 of the current year and December 31 of the current
year, respectively. Unless otherwise agreed upon between the officer
and the employer, such return shall show the name and Social Security
number of each such employee, the earned income of such employee during
such preceding three month period, the tax deducted therefrom, the
political subdivisions imposing the tax upon such employee, the complete
address of each and every employee subject to withholding, the total
earned income of all such employees during such preceding three month
period, and the total tax deducted therefrom and paid with the return.
Any employer who for two of the preceding four quarterly periods has
failed to deduct the proper tax, or any part thereof, or has failed
to pay over the proper amount of tax to the taxing authority, may
be required by the officer to file his return and pay the tax monthly.
In such cases, payments of tax shall be made to the officer on or
before the last day of the month succeeding the month for which the
tax was withheld.
C.
On or before February 28 of the succeeding year, every
employer shall file with the officer:
(1)
An annual return showing the total amount of earned
income paid, the total amount of tax deducted and the total amount
of tax paid to the officer for the period beginning January 1 of the
current year and ending December 31 of the current year.
(2)
A return withholding statement for each employee employed
during all or any part of the period beginning January 1 of the current
year and ending December 31 of the current year, setting forth the
employee's name, address and Social Security number, the amount of
earned income paid to the employee during said period, the amount
of tax deducted, the political subdivisions imposing the tax upon
such employee and the amount of tax paid to the officer. Every employer
shall furnish two copies of the individual return to the employee
for whom it is filed.
D.
Every employer who discontinues business prior to
December 31 of the current year, shall within 30 days after the discontinuance
of business, file the returns and withholding statements hereinabove
required and pay the tax due.
E.
Except as otherwise provided herein, every employer
who willfully or negligently fails or omits to make the deductions
required by this section shall be liable for payment of the taxes
which he/she/it was required to withhold to the extent that such taxes
have not been recovered from the employee. Notwithstanding the foregoing,
no employer shall be held liable for failure to withhold earned income
taxes or for the payment of such withheld tax money to a political
subdivision other than the Borough if such failure to withhold or
such incorrect transmittal of withheld taxes arises from incorrect
information as to the employee's place of residence submitted by the
employee, nor shall an employer be liable for failure to withhold
earned income taxes, or to make reports of wages, salaries, commissions
or other compensation of his/her/its employees, unless the official
continuing register of all earned income taxes levied under the authority
of the Local Tax Enabling Act, as amended, maintained and supplemented
annually by the Department of Community and Economic Development,
lists the Borough's levying of the earned income tax.
F.
The failure or omission of any employer to make the
deductions required by this section shall not relieve any employee
from the payment of tax or from complying with the requirements of
this article relating to the filing of declarations and returns.
A.
The Borough Council, by resolution, shall appoint
the officer.
B.
It shall be the duty of the officer to collect and
receive the taxes, fines and penalties imposed by this article. It
shall also be his/her/its duty to keep a record showing the amount
received by him/her/it from each person or business paying the tax
and date of such receipt.
C.
Each officer, before entering upon his/her/its official
duties, shall give and acknowledge a bond to the Borough. If the Borough
shall, by ordinance or resolution, designate any bond previously given
by the officer as adequate, such bond shall be sufficient to satisfy
the requirements of this subsection. Each such bond shall be joint
and several with one or more corporate sureties which shall be surety
companies authorized to do business in this Commonwealth and duly
licensed by the Insurance Commissioner of this Commonwealth. Each
bond shall be conditioned upon the faithful discharge by the officer,
his/her/its clerks, assistants, appointees of all trusts confided
in him/her/it by virtue of his/her/its office, upon the faithful execution
of all duties required of him/her/it by virtue of his/her/its office,
upon the just and faithful accounting or payment over, according to
law, of all monies and balances thereof paid to, received or held
by him/her/it by virtue of his/her/its office and upon the delivery
to his/her/its successor or successors in office of all books, papers,
documents or other official things held in right of his/her/its office.
Each such bond shall be taken in the name of the Borough, and shall
be for the use of the Borough appointing the officer, and for the
use of such other person or persons for whom money shall be collected
or received, or as his, her or its interest shall otherwise appear,
in case of a breach of any of the conditions thereof by the acts or
neglect of the principal of the bond. The Borough, or any person,
may sue upon the said bond in his, her or its own name for his, her
or its own use. Each such bond shall contain the name or names of
the surety company or companies bound thereon. The Borough shall fix
the amount of the bond at an amount equal to the maximum amount of
taxes which may be in the possession of the officer at any given time.
The Borough may at any time, upon cause shown and due notice to the
officer, and his/her/its surety or sureties, require or allow the
substitution or the addition of a surety company acceptable to the
Borough for the purpose of making the bond sufficient in amount, without
releasing the surety or sureties first approved from any accrued liability
or previous action on such bond. The Borough shall designate the custodian
of the bond required to be given by the officer.
D.
The officer charged with the administration and enforcement
of the provisions of this article is hereby empowered to prescribe,
adopt, promulgate and enforce rules and regulations relating to any
matter pertaining to the administration and enforcement of this article,
including provisions for the reexamination and correction of declarations
and returns, and of payments alleged or found to be incorrect, or
as to which any overpayment is claimed or found to have occurred,
and to make refunds in case of overpayment, for any period of time
not to exceed six years subsequent to the date of payment of the sum
involved, and to prescribe forms necessary for the administration
of this article. No rule or regulation of any kind shall be enforceable
unless it has been approved, by ordinance or resolution, by Borough
Council. A copy of such rules and regulations currently in force shall
be available for public inspection.
E.
The officer shall refund, on petition of and proof
by the taxpayer, earned income tax paid on the taxpayer's ordinary
and necessary business expenses to the extent that such expenses are
not paid by the taxpayer's employer.
F.
The officer and agent designated by him/her/it are
hereby authorized to examine the books, papers and records of any
employer or of any taxpayer or of any person whom the officer reasonably
believes to be an employer or taxpayer, in order to verify the accuracy
of any declaration or return, or if no declaration or return was filed,
to ascertain the tax due. Every employer and every taxpayer and every
person whom the officer reasonably believes to be an employer or taxpayer,
is hereby directed and required to give to the officer, or to any
agent designated by him/her/it, the means, facilities and opportunities
for such examination and investigation as hereby authorized. The officer
shall have such power to subpoena books, records and papers of the
employer or taxpayer as may be found in authority of the Commonwealth
of Pennsylvania.
G.
Any information gained by the officer, his/her/its
agents, or by any other official or agent of the Borough as a result
of any declarations, returns, investigations, hearings or verifications
required or authorized by this article, shall be confidential, except
for official purposes and except in accordance with a proper judicial
order, or as otherwise provided by law.
H.
The officer is authorized to establish different filing,
reporting and payment dates for taxpayers whose fiscal years do not
coincide with the calendar year.
A.
The officer may sue in the name of the Borough for
the recovery of taxes due and unpaid under this article.
B.
Any suit brought to recover the tax imposed by this
article shall be instituted within three years after such tax is due,
or within three years after the declaration or return has been filed,
whichever date is later; provided, however, that this limitation shall
not prevent the institution of a suit for the collection of any tax
due or determined to be due in the following cases:
(1)
Where no declaration or return was filed by any person
although a declaration or return was required to be filed by him/her/it
under the provisions of this article, there shall be no limitation.
(2)
Where an examination of the declaration or return
filed by any person, or of other evidence relating to such declaration
or return in the possession of the officer, reveals a fraudulent evasion
of taxes, there shall be no limitation.
(3)
In the case of substantial understatement of tax liability
of 25% or more and no fraud, suit shall be instituted within six years.
(4)
Where any person has deducted taxes under the provisions
of this article and has failed to pay the amounts so deducted to the
officer, or where any person has willfully failed or omitted to make
the deductions required by this article, there shall be no limitation.
(5)
This section shall not be construed to limit Borough
Council from recovering delinquent taxes by any other means provided
by the Act.
C.
The officer may sue for recovery of an erroneous refund,
provided such suit is instituted within two years after making such
refund, except that the suit may be brought within five years if it
appears that any part of the refund was induced by fraud or misrepresentation
of material fact.
A.
If for any reason the tax is not paid when due, interest
at the rate of 6% per annum on the amount of said tax, and an additional
penalty of 1/2% of the amount of the unpaid tax for each month or
fraction thereof during which the tax remains unpaid, shall be added
and collected. Where suit is brought for the recovery of any such
tax, the person liable therefor shall, in addition, be liable for
the costs of collection and the interest and penalties herein imposed.
B.
Notwithstanding the provisions of Subsection A, the Borough may, by ordinance or resolution, establish a one-time period during which interest or interest and penalties that would otherwise be imposed for the nonreporting or underreporting of earned income taxes previously imposed and due shall be waived in total or in part if the taxpayer voluntarily files delinquent returns and pays the taxes in full during the period so established. If the Borough establishes such one-time period, it shall also adopt regulations to implement the provisions of this subsection.
C.
The provisions of Subsection B shall not affect or terminate any petitions, investigations, prosecutions or other proceedings pending under the provisions of this article, or prevent the commencement or further prosecution of any proceedings by the proper authorities for violations of this article. No proceedings shall, however, be commenced on the basis of delinquent returns filed pursuant to Subsection B if the returns are determined to be substantially true and correct and the taxes are paid in full within the prescribed time.
A.
Any person who fails, neglects or refuses to make
any declaration or return required by this article, any employer who
fails, neglects or refuses to deduct or withhold the tax from his/her/its
employees, any person who refuses to permit the officer or any agent
designated by him/her/it to examine his/her/its books, records and
papers, and any person who knowingly makes any incomplete, false or
fraudulent return, or attempts to do anything whatsoever to avoid
the full disclosure of the amount of his/her/its net profits or earned
income in order to avoid the payment of the whole or any part of the
tax imposed by this article, shall, upon conviction thereof in summary
proceeding before a District Justice or the Court of Common Pleas
of Union County, be sentenced to pay a fine of not more than $500
for each offense, plus costs of prosecution, and in default of payment
of payment of said fine and costs to be imprisoned for a period not
exceeding 30 days.
B.
Any person who divulges any information which is confidential
under the provisions of this article, shall, upon conviction thereof
in a summary proceeding before a District Justice or the Court of
Common Pleas of Union County, be sentenced to pay a fine of not more
than $500 for each offense, plus costs of prosecution, and in default
of payment of said fines and costs to be imprisoned for a period not
exceeding 30 days.
C.
The penalties imposed under this section shall be
in addition to any other penalty imposed by any other section of this
article.
D.
The failure of any person to receive or procure forms
required for making the declaration or returns required by this article
shall not excuse him/her/it from making such declaration or return.
This article is adopted pursuant to the authority
conferred by the Act of December 31, 1965, P.L. 1257 (53 P.S. § 6901
et seq.), as amended.
It is hereby declared to be the intent of Borough
Council that this article shall replace in its entirety all prior
ordinances enacted, resolutions adopted, motions approved, or other
actions taken by Borough Council levying an earned income tax, and/or
in any manner affecting the specific terms or provisions of said earned
income tax as levied, the provisions of which shall remain in full
force and effect for each year thereafter, without annual reenactment
unless the rate of tax is subsequently changed.
This article shall become effective on the first
day of January 2004, and the tax shall continue in force on a calendar
year or a taxpayer fiscal year basis, without annual reenactment,
unless the rate of the tax is subsequently changed. Changes in rate
become effective on the date specified in the amending ordinance.
