Employer Withholding Information Guide - General Information for Withholding Pennsylvania Personal Income Tax (REV-415)

REV-415 (SU) 01-23

GENERAL INFORMATION

FOR WITHHOLDING

PENNSYLVANIA

PERSONAL INCOME TAX

www.revenue.pa.gov

EMPLOYER

WITHHOLDING

INFORMATION

GUIDE

General Information

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CUSTOMER SERVICE

& TAXPAYER ASSISTANCE

TABLE OF CONTENTS Page

Employer Withholding Requirements . . . . . . . . . . . . . . . . . . . 1

Taxable Compensation Not Subject to Withholding . . . . . . . . 4

Employee Fringe Benefits

and Welfare Benefit Programs . . . . . . . . . . . . . . . . . . . . . . . . 5

Business Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Collection of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Calculation of Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Payment of Taxes Withheld . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Electronic Filing: Returns and Payments . . . . . . . . . . . . . . . 13

Withholding Statements (W-2) . . . . . . . . . . . . . . . . . . . . . . . . 14

General Information and Specifications: W-2 . . . . . . . . . . . . 15

General Information and Specifications: 1099 . . . . . . . . . . . 16

Amended Returns and Annual

Withholding Reconciliation Statement . . . . . . . . . . . . . . . . . . 18

Interest and Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Overpayments and Refunds . . . . . . . . . . . . . . . . . . . . . . . . . 20

Quick Reference Guide for Payroll Providers . . . . . . . . . . . . 21

Brochures & Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

EMPLOYER WITHHOLDING REQUIREMENTS

Pennsylvania law requires the withholding of Pennsylvania per-

sonal income tax from compensation of resident employees for

services performed within or outside Pennsylvania.

Pennsylvania personal income tax must also be withheld from

compensation of nonresident employees for services per-

formed within Pennsylvania, unless a nonresident lives in a

state with which Pennsylvania has a reciprocal tax agreement

(see Reciprocal Tax Agreements on Page 10 for details).

This guide is designed to help employers recognize and fulfill

these requirements.

Definition of Employer and Employee

An employer is any individual, partnership, association, corpo-

ration, government body or other entity required under the

Internal Revenue Code to withhold federal income tax from

wages paid to an employee. If the person for whom an individ-

ual performs or performed services does not have control of the

payment of the wages for such services, the person having

control of the payment of such wages is also an employer.

An employee is an individual from whose wages an employer is

required to withhold federal income tax.

How to Register

mypath.pa.gov. Registering online allows business owners to

withhold employer taxes with the Pennsylvania Department of

Revenue and open Unemployment Compensation accounts

administered by the Pennsylvania Department of Labor &

Industry.

Federal Employer Identification Number (FEIN)

Employers are required to provide their federal employer iden-

tification numbers (FEINs), to the Pennsylvania Department of

Revenue. Employers that did not provide an FEIN to the depart-

ment upon registration must provide this number as soon as it

is available from the federal government by registering for

myPATH at mypath.pa.gov and updating account information.

Compensation

PA compensation includes salaries, wages, commissions and

every other item of receipt related to employment – whether

received directly, through an agent, in cash, in property or oth-

erwise – unless specifically excluded (see Exclusions from

Compensation, Page 2). Compensation includes, but is not

limited to:

•

Current, deferred or prepaid remuneration for services;

•

Remuneration for refraining from services; and

•

Amounts paid as a result of:

(A) Initiation, modification, rescission or breach of an

employment contract;

(B) Unlawful practice with respect to terms, conditions or

privileges of employment; or

vation of employment opportunities.

Employee compensation is not limited to remuneration received

for positive action, remuneration that is contractually enforce-

able or remuneration paid directly by the employer. Thus,

employee compensation can include, but is not limited to:

•

Tips and other amounts over which the employer does not

have control, receipt, custody or payment;

•

A bonus or sum in excess of salary given to a professional

athlete for signing with a team;

•

Payments to current and former employees for a covenant

not to compete; and

•

Back or front pay for a period of time during which an indi-

vidual was wrongfully separated from a job, and front pay

paid in lieu of reinstatement.

Compensation can encompass many forms of remuneration,

including, but not limited to:

•

Salaries;

•

Wages;

•

Commissions;

•

Bonuses and incentive payments, whether based on profits

or otherwise;

•

Fees;

•

Stock options;

•

Tips; and

•

Similar remuneration received for services rendered by an

individual, whether directly or through an agent, and

whether in cash or in property.

Compensation paid in any medium other than cash is valued at

its fair market value. Some examples of mediums other than

cash include:

•

Foreign currency;

•

Checks or other negotiable instruments;

•

Freely transferable readily marketable obligations or other

cash equivalents;

•

Property interests;

•

Below-market-rate loans; and

•

Discharge of liabilities.

Exclusions from Compensation

Certain payments are not compensation, such as:

1. Damages (whether by suit or otherwise) for personal injuries

or sickness and payments made under workers’ compensa-

tion acts, occupational disease acts or similar legislation for

injuries received while working;

2. Group term insurance policies purchased for employees, so

long as the employer’s program is not discriminatory (unlike

the Internal Revenue Code, Pennsylvania does not have a

$50,000 threshold above which life insurance coverage

becomes taxable as compensation);

3. Prizes and awards, unless the winner is required to render

any substantial services as a condition to receiving the prize

or award;

4. Scholarships;

5. Fellowships and stipends deemed nontaxable; and

6. An employee’s personal use of employer-provided property

or of employer-provided services (See Employee Fringe

Benefits and Welfare Benefit Programs, Page 4).

Record-Keeping for Over-Collections

To comply with regulatory requirements, an employer must

maintain records for each and every payroll period and employ-

ee of how much, if any, of the tax that was deducted or collected

during the payroll period, was deducted or collected in addition

to the tax required to be deducted and withheld during the pay-

roll period for the payroll period. The records must provide a

breakdown for each of the following:

•

Amounts deducted pursuant to a written agreement under

61 PA Code § 113.3(b);

•

Amounts deducted pursuant to 61 PA Code § 113.7(2) for an

under-collection in another “withholding period”;

•

Amounts deducted in error; and

•

Over-collections repaid to employees for which the employ-

er has obtained a written receipt from the employee showing

the date and amount of repayment.

These records must be retained until the payroll period is

processed by the department.

Record-Keeping for Under-Collections

To comply with regulatory requirements, an employer must

maintain records for each and every payroll period and employ-

ee of each of the following:

•

How much, if any, of the tax required to be deducted during

the payroll period for the payroll period was not deducted

during the payroll period; and

•

How much, if any, of the tax required to be deducted during

the payroll period for the payroll period was deducted during

a subsequent payroll period.

These records must be retained until the payroll period is

processed by the department.

Other Record-Keeping Requirements

All nonwithholding applications, including an employee's state-

ment of non-residence in Pennsylvania and authorization to

withhold other states' income tax must be retained until the pay-

roll period is audited by the department.

TAXABLE COMPENSATION

NOT SUBJECT TO WITHHOLDING

Withholding of Pennsylvania personal income tax is not

required for remuneration paid to:

1. Agricultural workers and foreign agricultural workers on H-

2A visas whose renumeration is not subject to federal Social

Security tax (FICA) withholding. (However, an H-2A worker

may request that a payor withhold Pennsylvania Personal

Income tax from his compensation. If the payor agrees to

withhold, the payor becomes subject to all employer with-

holding rules and regulations. 61 Pa. Code § 113.3(b).);

2. Duly ordained, commissioned or licensed ministers of a

church in the exercise of their ministry; members of a reli-

gious order in the exercise of their ministry; and members of

a religious order in the exercise of duties required by such

order, only when the ministers’ and members’ compensation

is not subject to withholding for federal income tax

purposes;

3. Domestic servants in a private home, local college club or

local chapter of a college fraternity or sorority;

4. Casual employees for services performed that are not in the

normal course of the employer’s trade or business (federal

limitations of less than $50 and at least 24 days on the job

per quarter apply);

5. Employees of foreign governments or international organi-

zations who are citizens or residents of the U.S.;

6. Non-resident alien employees who are Pennsylvania resi-

dents for tax purposes, but who perform services outside

the U.S.;

7. Newspaper carriers and news vendors under age 18 and

others who are statutory employees for federal employment

tax purposes; and

8. Seamen engaged in interstate or international trade, and

nonresident individuals engaged in interstate transportation

activities such as railroad crews, airplane crews or truck or

bus drivers, to the extent pay is exempt from withholding

under federal law.

Miscellaneous Provisions

Payments received as consideration for terminating employ-

ment before reaching normal retirement age or refraining from

the performance of services also constitute taxable compensa-

tion. Such payments are subject to withholding if the payor is an

employer required to withhold federal income tax from the

wages or compensation paid to the employee during the

taxable year.

EMPLOYEE FRINGE BENEFITS

AND WELFARE BENEFIT PROGRAMS

Employee fringe benefit programs, such as pensions, profit-

sharing and stock bonus plans and simplified employee plans

(SEP) are established by employers to provide additional com-

pensation to participating employees upon or after separation

from service, the completion of a fixed period of participation,

the lapse of a fixed number of years, or a showing of financial

hardship.

Employee welfare benefit programs are established by employ-

ers to provide benefits to employees or their beneficiaries, such

as child care facilities; life, accident or health insurance cover-

age; legal services; medical benefits; supplemental unemploy-

ment compensation (SUB); tuition reductions; disability bene-

fits, strike benefits and dismissal pay.

Nontaxable Benefits

In general, payments made by employers for employee welfare

benefit plans that provide medical, dental or vision care for their

employees are not considered taxable compensation for

Pennsylvania purposes. Further, supplemental unemployment

compensation benefits and most group-term life insurance pre-

mium payments should not be included in compensation. Other

payments not subject to withholding include the following:

•

Amounts received for the permanent loss or loss of use of a

part or function of the body, or permanent disfigurement;

•

Amounts calculated with reference to the nature of a sick-

ness or injury and without regard to the period the employee

is absent from work;

•

Amounts (other than regular wages or sick leave pay), cal-

culated with regard to the period the employee is absent

from work due to sickness or disability; and

•

Amounts paid to the beneficiaries or estate of an employee

who died.

The personal use of an employer’s property (leased or owned)

or a service provided by the employer is not considered taxable

compensation. Nontaxable items include the personal use of a

company car, accounting services or childcare provided – not

reimbursed – by the employer.

Generally, an employer provides a service or property when the

company assumes the financial responsibility for the liability or

payment. In other words, the expense is billed to the company,

and the company is responsible for the payments. For example,

a company seeking to provide transportation as a nontaxable

benefit for its employees could use a company van to transport

them. The benefit becomes taxable when the company reim-

burses employees for bus fare to commute or provides a

transportation allowance.

Federally excludable no-additional cost services, qualified

employee discounts, working condition fringe benefits or

qualified transportation fringe benefits are not considered

taxable so long as the employee does not have the choice

between cash and the benefit, or the employee does not reduce

his/her salary in order to receive the benefit. For example, a

program under which an employee is furnished parking

facilities, use of company grounds, picnic areas or a workout

facility, at no reduction in the employee’s salary and where the

employee is not reimbursed for the benefit, provides benefits

not considered compensation, and thus, not subject to

withholding.

Taxable Benefits

Non-cash benefits, which are reportable as compensation

under Internal Revenue Service rules, are generally taxable for

Pennsylvania personal income tax purposes and are therefore

subject to withholding. Taxable benefits include, but are not lim-

ited to:

•

Payments made by the employer to help employees with

adoption expenses;

•

Payments made by the employer to help employees with

additional medical or dental expenses not covered by med-

ical insurance, unless allowable as an ordinary, reasonable,

and necessary business expense (medical expenses paid

under a qualifying self-insured medical reimbursement

account such as a medical savings account, are not taxable);

•

Life insurance payments made by the employer on

employees’ dependents;

•

Amounts paid by the employer for non-job related educational

assistance provided to employees or their dependents;

•

Amounts paid to employees in lieu of using vacation days;

and

•

Payments by employers into pension plans, 401(k) plans or

other retirement plans made pursuant to the employee’s

election, by salary reduction agreement or through periodic

payroll deductions, are taxable to employees and should be

included in Pennsylvania gross wages on their W-2 forms.

Employer Contributions

Contributions by an employer to employee deferred payment

programs and welfare benefit programs on behalf of such

employees generally are excludable from the employee’s

income to the extent the contributions constitute reasonable

compensation for services and are not subject to withholding.

Pennsylvania tax law makes no distinction between stockholder

employees or officers and other employees.

Pennsylvania tax law regarding simplified employee plans

(SEP) differs from federal law. For Pennsylvania income tax

purposes, employer contributions to a SEP are excludable from

the compensation of an employee and are not subject to with-

holding. For federal income tax purposes, an employer contri-

bution to a SEP must be included in gross income and then

deducted by the employee.

BUSINESS EXPENSES

Reimbursement for Expenses

All reimbursements and allowances paid to employees are

compensation unless:

•

The expenses reimbursed are allowable business expenses;

•

Employees are required to and do account for these

expenses to the employer; and

•

The employer reimbursed its employee in the exact amount

of the allowable business expense.

Further, a fixed mileage allowance or per diem living expense

allowance that does not exceed applicable federal limits is not

reportable compensation, and therefore is not subject to

withholding.

Allowable Business Expenses

To be an allowable business expense, the expense must be

ordinary, actual, reasonable and necessary. This means the

expense must be:

•

Customary and accepted in the industry or occupation in

which the employee works;

•

Directly related to the taxpayer’s present occupation, as

opposed to an occupation he plans to enter in the future;

•

Reasonable in amount (not excessive); and

•

Necessary to enable the employee to perform properly the

duties of employment.

Expense Reimbursements

The following expense reimbursements are compensation sub-

ject to withholding:

•

Personal, living or family expenses;

•

Dues to fraternal organizations, professional societies,

chambers of commerce and recreational clubs;

•

Dues and subscription costs to publications, even when the

publications are related to your trade or profession;

•

Political candidate or campaign contributions;

•

Charitable contributions;

•

Commuting expenses;

•

Cost of meals while working late, unless while traveling

overnight away from home;

•

Occupational privilege taxes or assessments and other

local, county, state, federal and foreign taxes;

•

Childcare or elder care expenses;

•

Life, disability and health insurance premiums;

•

Contributions to deferred compensation plans and other

pension plans;

•

Legal fees (except to recover back wages), fines, penalties

and bad debts;

•

Bribes, kickbacks and other illegal payments;

•

Job hunting or other employment pursuit expenses;

•

Malpractice insurance premiums, except when required by

law or by the employer as a condition of employment;

•

Moving expenses for selling or purchasing a house; break-

ing a lease; house hunting; securing temporary lodging prior

to moving; seeking new employment; moving for your own

convenience; relocating to a new job or workplace less than

35 miles farther than your old commute from home to work;

or moving anywhere other than within or into Pennsylvania;

•

Educational expenses except when required by law or by

the employer; and

•

Capital expenditures.

Vouchered Reimbursements

The following vouchered reimbursements are not compensa-

tion and are not subject to withholding.

1. Union dues, assessments and initiation fees if:

a. Such payments are a condition of continued member-

ship in the union, and membership is related directly to

the employee’s present job; or

b. Such payments are required to be deducted from regular

wages under an agency shop agreement.

2. The cost incurred by an employee to purchase and maintain

uniforms or work clothing to protect the employee from

bodily injury if they are both:

a. Of a type specifically required by the employer as a con-

dition of employment; and

b. Not adaptable to general usage.

3. Expenditures for required small expendable tools and sup-

plies not furnished by an employer.

4. Trade, professional or occupational licenses or fees

required as a condition of employment (including malprac-

tice insurance and fidelity bond premiums where required by

law or employer).

5. Expenses for travel, meals and lodging on business trips;

transportation expenses (but not commuting); and business

expenses incurred by outside salesmen.

6. Office or work area expenses if:

a. The duties of employment require a suitable work area;

b. A suitable work area is not provided by the employer;

c. The work area used constitutes a principal place of work;

and

d. The work area is used regularly and exclusively to

perform the duties of employment.

7. Expenses paid or incurred by an employee for moving

him/herself, the immediate family, household goods and

personal effects, provided the transfer is in the interest of

and benefits the present employer, and is from one perma-

nent duty station to another.

8. Education expenses only if:

a. The education specifically is required by law or by the

employer to retain an established employment status or

rate of compensation; and

b. The education is not part of a program for a new occu-

pation, trade or business, even if the employee does not

intend to enter that new occupation, trade or business.

Education costs voluntarily paid or incurred merely to

maintain or improve skills are not allowable business

expenses.

9. Business gifts.

COLLECTION OF TAXES

Tax is to be withheld as employees are paid, even on supple-

mental compensation not paid daily, weekly, semi-weekly, semi-

monthly, monthly or quarterly. An employer is not permitted to

deduct from the compensation of an employee just from the last

payment for a deposit period; rather the employer is to withhold

from each paycheck issued.

Instructions for Withholding From Resident

Employees

1. When a Pennsylvania resident performs services in

Pennsylvania, the employer must withhold Pennsylvania

personal income tax from the employee’s compensation.

Where the employer is subject to Pennsylvania withholding

requirements and a Pennsylvania resident is rendering ser-

vices as the employer’s employee entirely in another state,

the employer must withhold on the entire compensation paid

to the employee, unless the other state has an income tax

and the employer is withholding the other state’s tax.

2. When a Pennsylvania resident is performing services partly

within and partly outside the commonwealth, one of the fol-

lowing provisions applies:

•

If the other state has an income tax and the employer is

withholding such tax, the employer also must withhold

Pennsylvania income tax on compensation for services

rendered within the commonwealth. Compensation

attributable to services within the commonwealth is a

proportion of the total compensation, determined by

dividing the number of working days in Pennsylvania by

the total number of working days, then multiplying the

result by total compensation.

Pennsylvania

# of PA Working Days

Total

Compensation Total # of Working Days Compensation

•

If the other state does not have an income tax, the

employer must withhold Pennsylvania income tax on all

compensation paid to the employee.

3. The commonwealth imposes tax on earnings of traveling

salespersons or other employees whose compensation

depends directly on the volume of business transacted by

them within the commonwealth. The amount of compensa-

tion subject to Pennsylvania withholding is determined by

dividing Pennsylvania sales volume by total sales volume,

then multiplying the result by total compensation.

Pennsylvania

$ Volume in PA

Total

Compensation $ Total Volume Compensation

Instructions for Withholding

From Nonresident Employees

1. When nonresidents perform services in Pennsylvania, their

employers must withhold Pennsylvania income tax from

their compensation, except when reciprocal tax agreements

apply (see below).

2. When nonresidents perform services partly within and partly

outside the commonwealth, only compensation for services

performed within the commonwealth is subject to

Pennsylvania withholding. To determine Pennsylvania com-

pensation, use the formulas detailed above, Instructions for

Withholding from Resident Employees.

Employers must withhold on all compensation paid to nonresi-

dents who work within and outside of Pennsylvania, unless the

employer maintains adequate records to accurately determine

the amount of compensation from Pennsylvania sources.

The employer may determine the portion of compensation allo-

cable to Pennsylvania on the basis of the preceding year’s

experience, on the basis of an estimate for the preceding year’s

experience or on the basis of an estimate for the current year

made by the employee or his employer. The employer shall

make any necessary adjustment during the year to assure the

proper amount is withheld for the year.

Reciprocal Tax Agreements

The Commonwealth of Pennsylvania has reciprocal tax agree-

ments with Indiana, Maryland, New Jersey, Ohio, Virginia and

West Virginia. These agreements provide that:

1. If a Pennsylvania resident employee receives compensation

for services performed in one of these six states, the

employer in that state withholds the Pennsylvania personal

income tax from compensation received and remits that tax

to Pennsylvania.

2. If a nonresident employee from one of these states receives

compensation for services performed within Pennsylvania,

no withholding of Pennsylvania personal income tax is

required provided an Employee’s Nonwithholding

Application Certificate (REV-419) is filed by the nonresident

employee with the Pennsylvania employer. The

Pennsylvania employer withholds the income tax of the

state in which the nonresident employee resides and pays

the tax to that state.

Military Spouses Residency Relief Act

The Military Spouses Residency Relief Act (MSRRA), permits a

service member’s nonmilitary spouse to retain status as an out-

of-state resident and source any nonmilitary compensation to

the state of residence under the following circumstances:

•

The service member must be in Pennsylvania in compliance

with military orders.

•

The service member’s spouse must be in Pennsylvania

solely to be with his/her spouse.

•

The service member’s spouse must have the same domicile

(legal residence) as the service member.

Compensation on other income earned in Pennsylvania for ser-

vices rendered by a service member’s nonmilitary spouse is not

taxable by Pennsylvania, when:

•

The nonmilitary spouse and service member have the same

out-of-state domicile;

•

The spouse is in Pennsylvania solely to be with the service

member; and

•

The service member is in Pennsylvania complying with

military orders.

However, a nonmilitary spouse’s other income from

Pennsylvania sources is subject to Pennsylvania personal

income tax to the extent it is earned, received or acquired from

sources within the commonwealth as follows:

•

By reason of ownership or disposition of an interest in real

or tangible personal property in Pennsylvania;

•

In connection with a trade or business in Pennsylvania,

except to the extent the trade or business receives income

for services performed by the MSRRA-qualifying service

member’s spouse; and/or

•

From intangible personal property employed in a trade, pro-

fession, occupation or business carried on in Pennsylvania.

The nonmilitary spouse of a service member whose

wages/salary is exempt from Pennsylvania personal income tax

under MSRRA should file a Pennsylvania form REV-419 with

his/her Pennsylvania employer, claiming exemption from

Pennsylvania income tax withholding.

CALCULATION OF WITHHOLDING

For each payroll period, an employer must calculate the tax to

be withheld from an employee’s compensation by multiplying

such compensation subject to withholding by the current per-

centage rate, 3.07%, which can be found by visiting the

department’s Online Customer Service Center at

www.revenue.pa.gov. A payroll period is a period for which a

payment of compensation ordinarily is made to an employee by

his employer, and payroll periods may be daily, weekly, semi-

weekly, semi-monthly, monthly, quarterly, semi-annually or

annually. If an employee receives supplemental or other com-

pensation, an employer must determine the tax to withhold by

adding the supplemental or other compensation for the current

payroll period and multiplying this amount by the withholding

rate.

PAYMENT OF TAXES WITHHELD

Every employer must pay the tax required to be deducted and

withheld for each quarter to the department on a quarterly,

monthly, semi-monthly or semi-weekly basis. The payment fre-

quency is determined as follows:

1. Quarterly: If the aggregate amount required to be deducted

and withheld for each quarterly period reasonably can be

expected to be less than $300, the employer must remit the

tax quarterly on or before the last day of April, July, October

and January for the four quarters ending the last day of

March, June, September and December.

2. Monthly: If the aggregate amount required to be deducted

and withheld for each quarterly period reasonably can be

expected to be $300 or more, but less than $1,000, the

employer must remit the tax monthly on or before the 15th

day of the succeeding month for January to November and

on or before Jan. 31 for the month of December.

3. Semi-monthly: If the aggregate amount required to be

deducted and withheld for any quarterly period reasonably

can be expected to be $1,000 or more, but less than $5,000,

the employer must remit the tax semi-monthly within three

banking days after the close of each semi-monthly period.

The semi-monthly periods end on the 15th and last days of

each month.

4. Semi-weekly: Where the aggregate total amount required to

be deducted and withheld for each quarterly period reason-

ably can be expected to be $5,000 or more per quarter or

$20,000 or more per calendar year, the employer must remit

the tax semi-weekly based on the instructions below.

When the employer’s payroll date is Wednesday, Thursday

or Friday, the remittance is due on the following Wednesday

after that payday. When the employer’s payroll date is a

Saturday, Sunday, Monday or Tuesday, the remittance is

due the following Friday after that payday.

Payment frequency change request: A change to a more fre-

quent payment schedule must be requested 15 days prior to

the beginning of any quarter. You may request a frequency

change through your myPATH account or by submitting a

written request via fax to 717-787-0145 or by emailing

[email protected].

An employer may change to a less frequent payment schedule

only at the beginning of a calendar year, so long as the amount

required to be deducted and withheld for each quarter is rea-

sonably expected to be less than the criteria amount for the cur-

rent payment schedule.

PA Quarterly Withholding Returns

Quarterly withholding returns must be filed online at

mypath.pa.gov or by phone using TeleFile (1-800-748-8299).

Every employer required to deduct and withhold tax must file a

quarterly return of income tax withheld on or before the last day

of April, July, October and January for each three month period

ending the last day of March, June, September and December.

Employers that remit withheld taxes on a monthly, semi-month-

ly, or semi-weekly schedule must file the quarterly reconciliation

return.

The Pennsylvania Department of Revenue requires all third-

party preparers that prepare 11 or more quarterly withholding

returns, to file electronically on myPATH at mypath.pa.gov.

The “third-party preparer” is defined as any person, fiduciary,

corporation or other entity who prepares or who employs one or

more persons to prepare original and amended returns to the

department. If a third-party preparer has multiple business loca-

tions, all locations should be included.

ELECTRONIC FILING:

RETURNS AND PAYMENTS

The department offers two electronic filing options, myPATH

and TeleFile.

myPATH is an internet based filing system that allows

taxpayers to file returns and payments electronically without

cost, visit mypath.pa.gov to get started.

TeleFile is a telephone filing system designed for taxpayers

who do not have computer access. Pre-registration is not nec-

essary to use TeleFile, however, you will need your Account ID,

FEIN or SSN, 10-digit Revenue ID, and the period ending date

of the period you wish to file for prior to calling. TeleFile is toll-

free and can be accessed 24 hours a day/7 days a week by

calling 1-800-748-8299.

myPATH File Upload Process

When uploading W-2s, quarterly withholding returns, or

payments, there is no limit on the number of files you may

upload, however, there is a limit of 20 MB of data per file.

File specifications vary by form type and are found at

mypath.pa.gov in the Accountant Center or the department's

website at www.revenue.pa.gov.

Third Party Vendors: The department also has third party ven-

dors who will provide e-filing software for those taxpayers who

do not wish to use the department’s e-filing options. A list of

approved software vendors is available on the department’s

website at www.revenue.pa.gov.

IMPORTANT: Quarterly withholding returns are NOT available

for download from the department’s website and the use of

other tax forms could result in non-filer notification and/or the

misapplication of the tax payment.

Remittance of Tax Payments

by Electronic Funds Transfer (EFT)

By regulation, the PA Departments of Treasury and Revenue

implemented a program enabling taxpayers to remit tax pay-

ments through Electronic Funds Transfer (EFT). This regulation

requires the participation of taxpayers remitting a payment of

$1,000 or more.

Failure to comply with the EFT remittance requirements may

result in an assessment of a penalty equal to 3 percent of the

total tax due, not to exceed $500. The penalty may be imposed

on all payments of $1,000 or more that are not presented to the

Department of Revenue by an approved electronic payment

method. If a business does not meet the $1,000 threshold, it

may voluntarily request participation in the program.

All tax documents are still required to be filed even though

the payments are made through EFT.

EFT Requirement: If you meet the $1,000 payment threshold,

you are required to remit your payment electronically.

Electronic Payment Methods: Taxpayers can choose one of

the following electronic methods: Automated Clearing House

(ACH) Debit, ACH Credit, or Credit/Debit card. A convenience

fee, which is based on the tax due, will be charged by the ven-

dor for processing the Credit/Debit card transaction. Credit card

payments can be made by telephone or online. Visit the

department’s website at www.revenue.pa.gov for more

information.

WITHHOLDING STATEMENTS (W-2)

An employer must complete two copies of the Wage and Tax

Statement (form W-2) for each employee to satisfy Pennsylvania

tax requirements. One copy must be furnished to the employee,

and one copy must be submitted to the Department of Revenue.

The W-2s must contain the following information:

1. “Pennsylvania” printed, stamped or typed on the form;

2. The employer’s name, address and Federal Employer

Identification Number (FEIN);

3. The employee’s name, address and Social Security

number;

4. The total amount of compensation subject to Pennsylvania

personal income tax for the entire tax year; and

5. The total amount of Pennsylvania tax withheld. The total

amount of tax withheld must be shown in the box on the

form for “State Tax Withheld” and this block must specifically

be identified as withheld tax for the Commonwealth of

Pennsylvania.

GENERAL INFORMATION

AND SPECIFICATIONS: W-2

Filing Requirements

•

Each entity with a unique Federal Employer Identification

Number (FEIN) must file as a separate employer.

•

Regardless of the federal due date, W-2s, 1099-Rs, 1099

MISC, 1099 NEC and REV-1667s must be filed in Pennsyl-

vania by January 31 following the tax year being reported.

•

The (REV-1667) Annual Withholding Reconciliation

Statements, must be completed and submitted with each

W-2/1099 form.

For example, if you submit W-2 wage records for 32 dif-

ferent employers (32 different FEINs) you must submit

32 (REV-1667) Annual Withholding Reconciliation

Statements.

Screen printouts from myPATH are not acceptable

replacements for the REV-1667.

Accepted Filing Methods

Based Upon Number of Employees

Specifics about Pennsylvania’s form W-2/1099 reporting

requirements can be found in W-2/1099 Employer Withholding

Reporting Instructions and Specifications Handbook, available

at www.revenue.pa.gov.

*Acceptable Paper W-2 sizes (cut to size)

•

8 1/2 X 5 1/2 inches (preferred size)

•

8 1/2 X 2 1/2 inches

•

4 1/4 X 5 1/2 inches

•

7 1/2 X 2 3/4 inches

•

8 1/2 X 2 3/4 inches

•

6 1/2 X 2 1/2 inches

•

3 3/4 X 5 inches

•

3 3/4 X 5 1/4 inches

*Unacceptable Paper W-2s

•

All onion skin W-2s (Employer Copy “D”);

•

W-2s that are very tiny (most acceptable sizes are listed

above);

Taxpayers Filing 10 or More W-2s

Must File Electronically

myPATH

Taxpayers Filing Fewer Than 10 W-2s

myPATH

Paper*

TeleFile (available only for W-2s),

1-800-748-8299

•

W-2s without field labels (e.g. “Employee SSN”, “FEIN”,

“15”, “16” etc.);

•

W-2s where data is printed on labels or data is unreadable

for some other reason;

•

W-2s with dark background;

•

Blank W-2s;

•

“Grand-Total” pages; and

•

Columnar Listings.

Where to File Annual W-2 Reports

Complete and send reconciliation statements, along with all

paper W-2 forms to one of the following addresses:

•

If using the U.S. Postal Service:

PA DEPARTMENT OF REVENUE

PO BOX 280412

HARRISBURG PA 17128-0412

•

If using a private carrier:

PA DEPARTMENT OF REVENUE

STRAWBERRY SQUARE, FLOOR 9

327 WALNUT STREET

HARRISBURG PA 17128

All W-2 wage records must be submitted to the PA Department

of Revenue by January 31 following the year of compensation,

or 30 days from the termination of business, if the business ter-

minated during the calendar year. If employment was terminat-

ed before the close of a calendar year, an employee may

request, in writing, that the employer furnish them a W-2 wage

record at an earlier time. If there is no reasonable expectation

on the part of both employer and employee of further employ-

ment during the calendar year, then the employer shall furnish

the W-2 wage record to the employee on or before the 30th day

after the date of the request, or the 30th day after the date on

which the last payment of wages is made, whichever is later.

Any employer who willfully furnishes a false or fraudulent W-2

wage record, willfully fails to furnish a statement in the pre-

scribed manner of time or fails to show the information required

is liable for a penalty of $50 for each failure.

GENERAL INFORMATION

AND SPECIFICATIONS: 1099

1099-R Forms

•

Payers of distributions from profit sharing, retirement

arrangements, insurance contracts, etc. are required to file

federal form 1099-R for Pennsylvania personal income tax

purposes.

•

Forms 1099-R showing zero Pennsylvania withholding do

not need to be submitted by the entity that has issued them,

however, the department reserves the right to request this

information.

Who Must File

•

Anyone making a distribution to a taxpayer out of a pension

or profit sharing plan (other than by reason of death, disabil-

ity or retirement) must submit to the department a form

1099-R for each distribution that exceeds the taxpayer’s

contribution to the plan by $10 or more.

What to Report

A separate form 1099-R must be filed for each taxpayer receiv-

ing a distribution. Copies are acceptable. The return must show

the following:

•

Name, Address and (SSN) Social Security Number of the

person making the distribution.

•

Name, Address and (SSN) Social Security Number of the

taxpayer receiving the distribution.

•

The amount or value of the distribution.

•

The amounts contributed by the employer and employee,

respectively.

When to File

•

The return must be filed on or before January 31 for distrib-

utions made to a taxpayer in the preceding calendar year.

1099-MISC Forms

Who Must File

•

Under Act 43 of 2017, payors of Pennsylvania-source com-

pensation and business income to nonresidents and

lessees of Pennsylvania real estate making lease payments

to nonresidents are required to withhold income tax from

such payments where payments are $5,000 or more annu-

ally. The payors are also required to submit copies of federal

forms 1099-MISC to the department. The United States

government, the Commonwealth of Pennsylvania, their

agencies, instrumentalities, and any political subdivisions of

Pennsylvania are excluded from this withholding

requirement.

•

Any person who makes payments of Pennsylvania source

income from one of PA’s eight taxable classes of income to

resident and nonresident individuals, entities treated as a

partnership for tax purposes, or single member limited liabil-

ity companies and is required to provide form 1099-MISC to

the federal government with respect to the payments must

also submit a copy to the department.

•

Forms 1099-MISC should only be filed with the department

as required by statute.

When to File

The forms are due to the department by January 31 of the

ensuing tax year.

1099 Filing Information

The Department of Revenue does NOT require the submission

of most 1099s for individual personal income tax purposes,

unless there is PA income tax withheld. (Example: 1099-A,

1099-B, 1099-INT, 1099-DIV)

Specifics about Pennsylvania’s Form 1099-MISC reporting

requirement can be found under Nonresident Withholding,

available at www.revenue.pa.gov.

Accepted Filing Methods

Based Upon Number of Employees

Specifics about Pennsylvania’s Form W-2/1099 reporting

requirements can be found in W-2/1099 Employer Withholding

Reporting Instructions and Specifications Handbook, available

at www.revenue.pa.gov.

Where to File 1099 Forms

Paper 1099-Rs or 1099-MISC showing PA tax withheld must be

accompanied by the (REV-1667) Annual Withholding

Reconciliation Statement. Forms should be mailed to:

PA DEPARTMENT OF REVENUE

BOX 280904

HARRISBURG PA 17128-0904

Paper 1099-Rs or 1099-MISC showing zero PA withholding

should be mailed to:

PA DEPARTMENT OF REVENUE

BUREAU OF INDIVIDUAL TAXES

1099-R/1099-MISC FORMS

PO BOX 280509

HARRISBURG PA 17128-0509

AMENDED RETURNS AND ANNUAL

WITHHOLDING RECONCILIATION STATEMENT

•

If an error is discovered after a return was filed, a taxpayer

can correct the error by filing an amended return.

•

If the error results in an overpayment, an amended quarterly

withholding return must be filed within three years of the date

the original payment was received in order to receive a credit

or refund.

•

If a payment was remitted with an original return, include the

amount of payment in total deposits for the quarter.

Taxpayers Filing 10 or More

1099s Must File Electronically

myPATH

Taxpayers Filing Fewer Than 10 1099s

myPATH

Paper 1099 forms

•

If a credit was received from an original return, deduct that

amount from the total deposits for the quarter.

•

If the amended return results in a balance due, remit the tax

due with the amended return. Late charges may apply.

•

If, in any filing period, more than the correct amount of tax is

deducted from any wage payment, the employer is autho-

rized to make the appropriate adjustment in withholding for

a subsequent period or periods in the same taxable year. If

the over-withholding is not offset by the last withholding peri-

od of the year, the employee shall report the amount actual-

ly withheld on their yearly income tax return.

Amended Quarterly Withholding

Returns and W-2Cs

The department will not accept an amended quarterly withhold-

ing return that decreases the total withholding without a copy of

the amended Annual Withholding Reconciliation Statement

(REV-1667) and copies of the W-2C(s). This only applies to

Pennsylvania residents. The department will not accept any

decreases of total withholding that involves a Pennsylvania

non-resident employee.

INTEREST AND PENALTIES

Interest

If any amount of tax required to be withheld is not reported and

paid in full on or before the due date, simple interest will be

charged daily from the date the tax is due and payable to date

of payment. The rate of interest will be announced annually by

the Department of Revenue and will continue for the calendar

year regardless of any subsequent change in the federal inter-

est rate in a calendar year. Interest is calculated by multiplying

the late paid or unpaid tax by days delinquent, then by the daily

interest rate. The daily interest rate equals the annual interest

rate divided by 365. For interest rates, see (REV-1611), Interest

Rates and Calculation Methods for All Taxes.

Penalties

Failure to file a quarterly return may result in the imposition of

additional penalty of 5 percent per month of the underpayment

for each month or fraction thereof (maximum penalty of 25

percent).

If a false or fraudulent return is filed, an amount equal to 50 per-

cent of any underpayment will be added to the tax. Failure to

pay withheld taxes to the Department of Revenue on or before

the due date for filing a quarterly reconciliation return will result

in an additional tax of 5 percent per month of the underpayment

for each month or fraction thereof (maximum penalty of 50

percent).

Personal Responsibility

All taxes withheld pursuant to law or under color of law constitute

a trust fund. If withheld tax is not paid to the department or is mis-

applied, an employee or representative of the employer who has

a duty to collect/pay tax or prepare tax documents; an officer,

director or partner of the employer; and a person who receives

trust fund monies may be held personally liable for payment.

Any person required to collect, account for and pay any income

tax who willfully fails to truthfully do so, or anyone who attempts

to evade or defeat such tax or its payment, is liable for a penalty

equal to the total of tax evaded, not collected, not accounted for

and not paid.

Criminal Prosecution

Any person who willfully fails or refuses to collect and remit tax,

fails to pay the tax, fails to file a return, files a fraudulent or false

return or presents for payment of tax a check that is returned to

the commonwealth as uncollectible, may be subject to criminal

prosecution.

OVERPAYMENTS AND REFUNDS

Verified overpayments for a quarter will be credited to the cur-

rent quarter after any outstanding collectible liabilities are off-

set, and notification will be sent to the employer.

If a refund is requested, a signed written request is required that

includes the name, FEIN and account number, the amount

requested and the period(s) in question. Please note that an

amended quarterly withholding return indicating an overpay-

ment does not constitute a refund request and no refund will be

issued based solely on an amended quarterly withholding

return. Refund requests may be faxed to 717-783-4124 or

emailed to [email protected].

Filing Returns and Payments

Please complete all lines of the record of withholding unless the

taxpayer is a quarterly filer. If the Department of Revenue does

not have a breakdown of withholding, the total withholding will

be divided evenly between each period, which could result in

penalties and interest.

*Acceptable Paper W-2 sizes

•

8 1/2 X 5 1/2 inches

•

8 1/2 X 2 1/2 inches

•

4 1/4 X 5 1/2 inches

•

7 1/2 X 2 3/4 inches

•

8 1/2 X 2 3/4 inches

•

6 1/2 X 2 1/2 inches

•

3 3/4 X 5 inches

•

3 3/4 X 5 1/4 inches

*Unacceptable Paper W-2s

•

All onion skin W-2s (Employer Copy “D”)

•

W-2s that are very tiny (most acceptable sizes are listed

above)

•

W-2s without field labels (e.g. “Employee SSN”, “FEIN”,

“15”, “16” etc.)

•

W-2s where data is printed on labels or data is unreadable

for some other reason

•

W-2s with dark background

•

Blank W-2s

•

“Grand-Total” pages

Important Information and Reminders

Quarterly Withholding Returns

Preparers that submit 11 or more returns are required to file

electronically using myPATH.

When a quarterly withholding return is amended for tax years

prior to the current year, W-2Cs are required to be filed with the

amended quarterly withholding return. The exception is when

W-2Cs are for employees who are not residents of

Pennsylvania and the tax withheld is being decreased. These

W-2Cs will be disallowed and the individual employee must file

a PA-40NR return to obtain a refund.

QUICK REFERENCE GUIDE

FOR PAYROLL PROVIDERS

Taxpayers Filing 10 or More W-2s

or 1099s Must File Electronically

myPATH

Taxpayers Filing Fewer Than 10 W-2s or 1099s

myPATH

Paper*

TeleFile (available only for W-2s),

1-800-748-8299

Due to Pennsylvania's three-year statute of limitation, amended

quarterly withholding returns will not be accepted for periods

older than three years.

Amended Quarterly Withholding Return

and W-2Cs

The department will not accept an amended quarterly withhold-

ing return that decreases the total withholding without a copy of

the amended Annual Withholding Reconciliation Statement

(REV-1667) and copies of the W-2C(s). This only applies to

Pennsylvania residents. The department will not accept any

decreases of total withholding that involves a Pennsylvania non-

resident employee.

File Upload Process

When uploading W-2s, quarterly withholding returns or pay-

ments, there is no limit on the number of files you may upload,

however, there is a limit of 20 MB of data.

If an import and upload error occurs, this indicates that some-

thing failed within the uploaded file. The problem could be a

spacing issue or it could be something as simple as having a

dash in the account number. You can view the specific file

errors in the upload portion of the program.

Detailed Statement of Account

Business taxpayers and tax practitioners now have the ability to

electronically request and receive a more detailed version of

the statement of account (e-SOA) in PDF format through

mypath.pa.gov.

Refunds

If a refund is requested, a signed written request is required that

includes the name, FEIN and account number, the amount

requested and the period(s) in question. Please note that an

amended quarterly withholding return indicating an overpay-

ment does not constitute a refund request and no refund will be

issued based solely on an amended quarterly withholding

return. Refund requests may be faxed to 717-783-4124 or

emailed to [email protected].

Act 32

All inquiries regarding Act 32 or local earned income tax should

be directed to the Pennsylvania Department of Community and

Economic Development at www.dced.pa.gov, not the

Pennsylvania Department of Revenue.

Data Exchange

Payroll providers are encouraged to setup a data exchange

for verifying account IDs and deposit frequencies with the

Department of Revenue. The payroll provider supplies

FEINs to the Department of Revenue in exchange for

account IDs and deposit frequencies, in an effort to stream-

line the process of mass data exchange. To request a data

exchange, please contact the Pennsylvania Department of

Revenue at [email protected].

QUICK REFERENCE GUIDE

FOR PAYROLL PROVIDERS cont.

BROCHURES & FORMS

REV-419 Employee’s Nonwithholding Application Certificate

REV-580 Brochure: Employer Withholding

REV-588 Starting a Business in Pennsylvania,

A Guide to Pennsylvania Taxes

REV-611 Brochure: Determining Residency for

PA Personal Income Tax Purposes

REV-612 Brochure: Military Pay for

PA Personal Income Tax Purposes

REV-631 Tax Forgiveness for PA Personal Income Tax

REV-637 Unreimbursed Allowable Employee Business

Expenses for PA Personal Income Tax Purposes

REV-677 Power of Attorney and Declaration of

Representative

REV-1705 Tax Account Information Change/Correction Form

REV-1706 Business Account Cancellation Form

REV-1716 Filing and Remittance Due Dates (Employer, W-2

and 1099 Forms)

Business taxpayers and tax practitioners now have

the ability to receive and view correspondence

online with myPATH. Visit mypath.pa.gov for more

information.

file electronically

using myPATH at