Greiner Bill Would Amend Recently Enacted Pennsylvania Personal Income Tax Withholding Provisions to Aid Businesses
HARRISBURG – Rep. Keith Greiner (R-Lancaster) is sponsoring legislation to address certain ambiguities and shortcomings in the recently expanded Pennsylvania Personal Income Tax withholding provisions applicable to nonresident nonemployee compensation and real estate lease payments. House Bill 926, which was introduced this week, would provide businesses with more clarity in meeting their compliance responsibilities, mitigate payor liability for good faith compliance with the withholding provisions, consolidate withholding, remittance and reporting provisions, and repeal certain reporting requirements.

Act 43 of 2017, which went into effect at the beginning of last year, imposed complicated, confusing, costly and burdensome Pennsylvania Personal Income Tax withholding and reporting requirements on businesses operating in the Commonwealth. In instances where a business is required to file a federal Form 1099-MISC with the Internal Revenue Service, it is required to withhold and remit Pennsylvania Personal Income Tax on certain payments of Pennsylvania source income of at least $5,000 made to a nonresident individuals or a disregarded entity with a nonresident owner, and on lease payments of at least $5,000 on Pennsylvania real estate made to nonresident individuals, estates and trusts. In addition, the Act expanded costly reporting requirements with respect to when a business had to file a federal Form 1099-MISC reporting Pennsylvania source income with the Department of Revenue even if no Pennsylvania Personal Income Tax withholding was required.

“Determining the income and payments made to nonresident vendors subject to Pennsylvania Personal Income Tax withholding is cumbersome and time consuming,” said Greiner. “There are significant administrative responsibilities and compliance costs. Although the Pennsylvania Department of Revenue has taken steps to mitigate the impact of the new law, further clarification and fixes are still needed.

“My bill clarifies how a payor is to withhold if it is not known whether the $5,000 threshold will be met at the time a payment is made. The bill also shifts the responsibility upon the recipient of the payment to provide the payor with the amount of that payment subject to withholding, if it relates to services performed both within and outside Pennsylvania and relieves the payor of liability if reliance on that information is reasonable. In addition, the bill consolidates the withholding, remittance and reporting requirements and repeals the newly enacted federal Form 1099-MISC reporting rules unless either withholding is required, or the filing of that form is otherwise required under the statute,” Greiner said.

Representative Keith J. Greiner, CPA
43rd Legislative District
Pennsylvania House of Representatives

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