[HISTORY: Adopted by the City Council of the City of Harrisburg 27-2016 by Ord. No. 4-2016. Amendments noted where applicable.]
Business privilege and mercantile tax: see Ch. 5-715.
Power to tax: see Local Tax Enabling Act, Act of Dec. 31, 1965, P.L. 1257, as amended (53 P.S. § 6924.311 et seq.).
Editor's Note: This ordinance also provided for the repeal of former Ch. 5-705, Local Services Tax, adopted 11-27-2007 by Ord. No. 21-2007
§ 5-705.8 Nonresident employers and self-employed individuals residing beyond the corporate limits of the City.
The following words and phrases, when used in this chapter, shall have the meanings ascribed to them, except where the context or language clearly indicates or requires a different meaning:
- The entity designated by the Director under whose direction this tax shall be collected, administered and enforced.
- The Director of the City's Bureau under whose authority this tax shall be collected, administered and enforced.
- EARNED INCOME
- Compensation as determined under Section 303 of the Act of March 4, 1971 (P.L. 6, No. 2), 72 P.S. § 7303, known as the "Tax Reform Code of 1971," and regulations in 61 Pa. Code Part I, Subpart B, Article V, 61 Pa. Code § 101.1 (relating to personal income tax), not including, however, wages or compensation paid to individuals on active military service. Employee business expenses are allowable deductions as determined under Article III of the "Tax Reform Code of 1971." The amount of any housing allowance provided to a member of the clergy shall not be taxable as earned income.
- An individual, partnership, association, corporation, governmental body, agency, or other entity employing one or more persons on salary, wage, commission, or other compensation basis, including a self-employed person.
- Any person, male or female, engaged in any occupation, trade or profession within the corporate limits of the City.
- NET PROFITS
- The net income from the operation of a business, profession, or other activity, except corporations, determined under Section 303 of the Act of March 4, 1971 (P.L. 6, No. 2), known as the "Tax Reform Code of 1971," and regulations in 61 Pa. Code Part I, Subpart B, Article V (relating to personal income tax). The term does not include income which is not paid for services provided and which is in the nature of earnings from an investment. For taxpayers engaged in the business, profession or activity of farming, the term shall not include:
- A. Any interest earnings generated from any monetary accounts or investment instruments of the farming business;
- B. Any gain on the sale of farm machinery;
- C. Any gain on the sale of livestock held 12 months or more for draft, breeding or dairy purposes; and
- D. Any gain on the sale of other capital assets of the farm.
- NONPRINCIPAL EMPLOYER
- An employer in a concurrent employment situation who does not pay the largest amount of salary, wage, commission or other compensation to an employee.
- Any trade, profession, business, or undertaking of any type, kind or character, including services, domestic or other, carried on or performed within the corporate limits of the City for which compensation is charged or received, whether by means of salary, wages, commissions, or fees for services rendered.
- POLITICAL SUBDIVISION
- The area within the geographical limits of the City of Harrisburg.
- PRINCIPAL EMPLOYER
- An employer in a concurrent employment situation who pays the largest amount of salary, wage, commission or other compensation to an employee.
- RESERVE COMPONENT OF THE ARMED FORCES
- The United States Army Reserve, United States Navy Reserve, United States Marine Corps Reserve, United States Coast Guard Reserve, United States Air Force Reserve, the Pennsylvania Army National Guard or the Pennsylvania Air National Guard.
- The local services tax in the amount levied by this chapter.
The City hereby levies and imposes on each occupation engaged in by individuals within its corporate limits during the fiscal year of 2016 and each fiscal year thereafter a local services tax, to the degree and for the duration authorized by law. This tax is in addition to all other taxes of any kind or nature heretofore levied by the City. Such tax shall continue in force on a fiscal-year basis without annual reenactment, except that the rate of the tax may be subsequently changed.
Each occupation, as hereinbefore defined, engaged in within the corporate limits of the City shall be subject to a local services tax in the amount of $156 per annum, said tax to be paid by the individual so engaged.
An employee shall pay a pro-rata share of the tax for each payroll period in which the person is engaging in his occupation. The pro-rata share shall be determined by dividing the tax levied pursuant to Subsection A of this section by the number of payroll periods established by his employer for the calendar year, as provided in § 5.705.4.
An individual who is self-employed shall pay the tax in its entirety as provided in §§ 5.705.6 and 5-705.7.
Each employer within the City, as well as each employer situated outside the City but who engages in business within the City, is hereby charged with the duty of collecting from each of his employees engaged by him and performing work for him within the City the pro-rata share of the tax, described in Subsection B of § 5-705.3, and making a return and payment of the withheld tax to the collector within 30 days of the end of each quarter of a calendar year as described in § 5-705.5. Further, each employer is hereby authorized to withhold the pro-rata share of the tax from each employee in his employ, whether such employee is paid by salary, wages or commission, and whether or not part or all such services are performed within the corporate limits of the City, unless the employee is engaging in concurrent employment with a principal employer or other nonprincipal employers located in higher-priority political subdivisions as described in Subsection E of this section or has an exemption certificate on file with the employer and the collector as described in Subsection B or C of § 5-705.11.
Withholding of the tax shall be made on a payroll-period basis for each payroll period during the calendar year in which an employee is engaging in an occupation, unless the employee is engaging in concurrent employment. For purposes of determining the pro-rata share, the employer shall round down the amount of the tax collected each payroll period to the nearest one-hundredth of a dollar.
If a person who claimed an exemption for a calendar year pursuant to Subsection B of § 5.705.11 becomes subject to the tax for that year, the employer shall withhold the tax for the first payroll period after receipt of notification that the employee is subject to the tax in a lump sum equal to the amount of the tax which was not withheld due to the exemption plus the per-payroll amount due for that first period. The amount of the tax withheld for the remaining payroll periods in the calendar year shall be as calculated in accordance with Subsection B of this section.
If the employee is engaging in concurrent employment, a nonprincipal employer shall refrain from withholding the tax to the extent the sum of the withholdings of the principal and other nonprincipal employers located in higher-priority political subdivisions, as described in § 5-705.6, for the fiscal year will reach $156 and if the employee provides a recent pay statement from a principal employer and other nonprincipal employers located in higher-priority political subdivisions that includes the name of the employers, the length of the payroll period and the amount of the tax collected. In order for the employer to refrain from withholding, it shall also be necessary for the employee to affirm in writing to the employer that the pay statement is from his principal employer or other nonprincipal employers located in higher-priority political subdivisions and that the employee will notify other employers of a change in principal place of employment within two weeks of the occurrence.
No employer shall be held liable for failure to withhold the tax or for payment of the withheld tax money to the collector if the failure to withhold the tax arises from incorrect information submitted by the employee as to the employee's place or places of employment, the employee's principal office or where the employee is principally employed. No employer shall be responsible for investigating exemption certificates or monitoring eligibility or exempting an employee form withholding except where a person with an exemption certificate issued under Subsection B of § 5.705.11 becomes subject to the tax as described in Subsection C of this section.
Each employer shall prepare and file a return showing a computation of the tax on forms to be supplied to him by the collector. Each employer, in filing this return and making payment of the tax withheld from his or her employees, shall be entitled to retain a commission calculated at the rate of 0.48% (0.0048) of the gross tax due and payable, provided that such tax is collected and paid over by the employer on or before the dates hereinafter set forth. It is further provided that, if the employer fails to file such return and pay the tax, whether or not he makes collection thereof from the salary, wages or commissions paid by him to such employee, the employer shall be responsible for the payment of the tax in full without deducting a commission as though the tax had originally been levied against the employer.
Each employer shall use his employment records from January 1 to March 31 for determining the number of employees from whom the tax shall be deducted and paid over to the collector on or before April 30. Supplemental reports shall be made by each employer on July 30, October 30 and January 30 of new employees as reflected on his employment records from April 1 to June 30, July 1 to September 30, and October 1 to December 31. Payments on these supplemental reports shall be made on July 30, October 30 and January 30, respectively.
Each individual who shall have more than one occupation within the City shall be subject to the payment of the tax on his principal occupation, by the individual if he is self-employed, or by his principal employer if he is employed. His principal employer shall withhold the tax and deliver to him evidence of withholding on a form meeting the requirements of Subsection E of § 5-705.4 to be furnished to the employer by the collector, which form shall be evidence of withholding having been made. When the completed form is presented to any other employer, that employer will not withhold the tax or part of the tax by authority of Subsections A and E of § 5-705.4.
In the event a person is engaged in more than one occupation which requires his working in more than one political subdivision, the first-priority political subdivision to collect the tax shall be the political subdivision in which his principal place of employment or business is located. In the event a person is engaged in an occupation which requires his working in more than one political subdivision during a payroll period and the political subdivision in which a person maintains his principal office or is principally employed does not levy the tax at the annual rate of $156, the second-priority political subdivision to collect the tax shall be the political subdivision in which the person resides and works to the extent a tax of $156, is not levied by the first-priority political subdivision. The third-priority political subdivision to collect the tax shall be the political subdivision in which a person works and which imposes the tax nearest in miles to the person's home to the extent a tax of $156, is not levied by the first- and second-priority political subdivisions. The place where a person works and the priority of collection shall be determined as of the day the taxpayer first becomes subject to the tax during the calendar year.
It is the intent of this provision that no person shall pay more than $156 in any calendar year as a tax, irrespective of the number of political subdivisions within which such person may be employed within any given calendar year. In case of dispute, a tax receipt of the taxing authority for that calendar year declaring that the taxpayer has made prior payment shall constitute prima facie certification of payment to all other political subdivisions. The collector, as the agent of the City, shall provide a taxpayer a receipt of payment upon request by the taxpayer.
All self-employed individuals who perform services of any type or kind or engage in any occupation or profession within the City shall be required to comply with this chapter and pay the tax to the collector on April 30, or as soon thereafter as he engages in an occupation.
In the event a self-employed person is engaged in more than one occupation within or without the City or in an occupation which requires his working in more than one political subdivision during the year, reporting priority of claims and prima facie certification of payment shall be in accordance with Subsection B of § 5-705.6.
Individuals employed within the City who are not exempt from the tax pursuant to § 5-705.11 and whose employer is not legally required to withhold the tax shall be considered self-employed persons for purposes of this chapter.
§ 5-705.8 Nonresident employers and self-employed individuals residing beyond the corporate limits of the City.
All employers and self-employed individuals residing or having their place of business outside of the City, but who perform services of any type or kind or engage in any occupation or profession within the City, do, by virtue thereof, agree to be bound by and subject themselves to the provisions, penalties and regulations promulgated under this chapter with the same force and effect as though they were residents of the City. Further, any individual engaged in an occupation within the City and an employee of a nonresident employer may, for the purpose of this chapter, be considered a self-employed person; and in the event this tax is not paid, the City shall have the option of proceeding against either the employer or employee for the collection of this tax as heretofore provided.
It shall be the duty of the collector, as the delegate of the Director, to accept and receive payments of this tax, penalties, interest thereon and costs of collection and to keep a record thereof showing the amount received by the collector from each employer or self-employed person together with the date the tax, penalties, interest thereon and costs of collection were received.
The collector, as the delegate of the Director, is hereby charged with the administration and enforcement of this chapter and is hereby, as the agent of the City, charged and empowered to prescribe, adopt and promulgate rules and regulations relating to any matter pertaining to the administration and enforcement of this chapter, the examination and correction of any return made in compliance with this chapter and any payment alleged or found to be incorrect, or as to which overpayment is claimed or found to have occurred, or any payment made by a taxpayer who is engaged in a business or occupation or businesses or occupations within the corporate limits of the City. Any person aggrieved by any decision of the collector shall have the right to appeal to the Court of Common Pleas of Dauphin County as in other cases provided.
The collector, as the delegate of the Director, is hereby authorized to examine the books and payroll records of any employer in order to verify the accuracy of any return made by an employer or, if no return was made, to ascertain the tax due. Each employer is hereby directed and required to give the collector the means, facilities and opportunity for such examination.
The collector, as the agent of the City, is hereby authorized to make refunds for overpayments of the tax or payments or withholding of the tax from exempt persons within three years of the due date for filing a return as extended or one year after payment of the tax, whichever is later, consistent with 53 Pa.C.S.A. §§ 8425 and 8426 of the Local Taxpayers Bill of Rights, as amended. Refunds made within 75 days after the last day an employer is required to remit the tax for the last quarter of the calendar year shall not be subject to interest imposed under 53 Pa.C.S.A. § 8426. The collector shall only provide refunds for amounts overpaid in a calendar year that exceed $1.
The Director shall adopt regulations for the processing of refund claims for overpayments of the tax or payments or withholding of the tax from exempt persons which shall be instituted whenever the collector informs the Director that refunds of such overpayments and withholdings are necessary. The regulations shall be consistent with 53 Pa.C.S.A. §§ 8425 and 8426 and as set forth in Subsection D of this section.
In the event that the tax imposed under this chapter remains due or unpaid 30 days after the due dates above set forth, the collector may sue for the recovery of the tax due or unpaid under this chapter, together with interest and penalty.
If for any reason the tax is not paid when due, interest at the rate of 6% on the amount of such tax shall be calculated beginning with the due date of the tax, and a penalty of 6% shall be added to the flat rate of the tax for nonpayment thereof.
The collector may impose on and collect from delinquent taxpayers and retain all reasonable costs of collection incurred by the collector in its enforcement and collection of delinquent tax payments, provided such collection and enforcement action occurs within five years after the last day of the year in which the tax was first due, and provided the collector reports the total of such cost collections to the City at least annually.
Whenever it occurs that an individual is engaged in a business or occupation or businesses or occupations within the corporate limits of the City from which he or she derives in the aggregate less than $24,500 per year earned income or net profits from all sources within the corporate limits of the City and a tax was withheld, such individual may file a claim for refund, as described in Subsection D of § 5-705.9.
Whenever it occurs that an individual is engaged in a business or occupation or businesses or occupations within the corporate limits of the City from which he or she reasonably expects to derive in the aggregate less than $24,500 per calendar year earned income or net profits from all sources within the corporate limits of the City, such individual may file a certificate with the collector, as the agent of the City, and with his employer in the City, directing that employer not to withhold the tax. The certificate shall be in a form approved by the collector and have attached to it a copy of all the individual's last pay stubs or W-2 forms from employment and any net profits from businesses within the City for the fiscal year prior to the fiscal year for which the individual is requesting an exemption.
Whenever it occurs that an individual who served in any war or armed conflict in which the United States was engaged and is honorably discharged or released under honorable circumstances from active service if, as a result of military service, the person is blind, paraplegic or a double or triple amputee or has a service-connected disability declared by the United States Veterans' Administration or its successor to be a total 100% permanent disability, such individual may, on proof of such disability filed with the collector, file an exemption certificate with the collector, as the agent of the City, and his employer in the City, directing that employer not to withhold the tax, or file a claim for refund, as described in Subsection D of § 5-705.9.
Funds derived from the local services tax may only be used for the following purposes:
Emergency services, which shall include emergency medical services, police services and/or fire services. No less than 25% of the funds derived from the local services tax shall be used for this purpose.
Road construction and/or maintenance.
Reduction of property taxes.
Property tax relief through the implementation of a homestead and farmstead exclusion in accordance with 53 Pa.C.S.A. Chapter 85, Subchapter F.
Any individual or employer who or which shall fail, neglect or refuse to pay the tax after it becomes due and payable, or otherwise violates any part of this chapter, shall face conviction before any Magisterial District Judge and be subject to a fine of not more than $300 for each offense and costs of court proceedings.