CENTRAL SUSQUEHANNA INTERMEDIATE UNIT Application: Payroll

Transcription

1 CENTRAL SUSQUEHANNA INTERMEDIATE UNIT Application: Payroll Setting Up EIT for Act 32 Reporting Step-by-step Instructions 2012 Central Susquehanna Intermediate Unit, USA

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3 Table of Contents Introduction... 1 Withholding Requirements... 1 Reporting Requirements... 1 Collector Formats and Requirements... 2 Employer Information... 2 Employee Information... 2 EIT and LST Information... 2 File Parameters... 2 Act 32 PSD Code Setup... 3 Municipalities Directory... 3 Understanding the PSD Code Assignments... 3 Employee Master/Tax Info... 4 When to Change the Employee Master Central Susquehanna Intermediate Unit, USA

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5 Setting Up EIT for Act 32 Reporting INTRODUCTION The passage of Act 32 requires changes in EIT reporting and very likely changes in how you have been withholding EIT. This document reviews our recommendations for what to change and when. Withholding Requirements Every employer within a tax collection district will be required to withhold local Earned Income Tax at the greater of either the employee's resident tax rate or the employee's nonresident tax rate based on his/her work location. All employers are required to obtain a certificate of residency form from each employee to assist in identifying the Political Subdivisions (PSDs) where the employee lives and works. After identifying his/her PSD, the employee's withholding tax rate can be determined. Reporting Requirements Employers having more than one location of employment in more than one tax collection district have a new filing option. This filing option will allow multi-location employers to file one tax return with the tax collector for the county. Employers who choose this option will be required to file the tax return with information and payment of income tax withheld on a monthly basis (within 30 days following the end of the month being reported). In order to take advantage of this option, multi-location employers must file a Notice of Intention to File Combined Returns and Make Combined Payments with the tax officer for each location of employment at least one month before filing its first combined return or prior to making its first combined payment. Revised: 10/09/ Central Susquehanna Intermediate Unit, USA Page 1

6 Setting Up EIT for Act 32 Reporting COLLECTOR FORMATS AND REQUIREMENTS The following information will assist you with setting up the EMPLOYER PARAMETERS > LOCAL TAX information. Employer Information The DIRECTORIES > EMPLOYER PARAMETERS/LOCAL TAX: EMPLOYER INFO is used to provide district and reporting period information in the submission file. Employer information may be required either in the first record in the file or in every record in the file. For each Field Parameter, identify whether the field is required to be in the first "header record" with an 'H'; in each "detail record", with a 'D'; or in both the "header record" and all "detail records", with a 'B', for both kinds of records. After determining whether the information will be included in the "header record", "detail record", or "both" kinds of records, identify the Location, which is used to determine the order in which information is included in the file. Both EIT and LST files can be set up on the EMPLOYER INFO screen. Use the Specify section to identify additional parameters for employer information fields within the submission file. Employee Information The DIRECTORIES > EMPLOYER PARAMETERS/LOCAL TAX: EMPLOYEE INFO is provided ONLY in the detail records of a file; therefore, designation between 'H', 'D', or 'B' is not needed. Use the Location fields to identify the order in which information is included in the file. Both EIT and LST files can be set up on the EMPLOYEE INFO screen. All employee information is selected based on the date range entered when the file is generated. Use the Specify section to identify additional parameters for employee information fields within the file. EIT and LST Information The DIRECTORIES > EMPLOYER PARAMETERS/LOCAL TAX: EIT and DIRECTORIES > EMPLOYER PARAMETERS/LOCAL TAX: LST tabs provide fields to designate the field position within the files for amounts and PSD Live / Work information for either the EIT or LST submission files. In each Location field (to the right of each field label) identify the field position in which information is to be included in the file. Enter data in the Size field only if needed; the default values should accommodate most tax collector file layouts. Use the Specify section to identify any additional specifications for each field in the file. File Parameters Use the DIRECTORIES > EMPLOYER PARAMETERS/LOCAL TAX: FILE INFO tab to identify the EIT and LST file formats and whether each file should Include field descriptions as header records. If you have not chosen the Multi-location option and need to remit separate files for each employee PSD Live location, select the option to Create files per PSD. If, in the EIT Directory field, you identify the default directory location where the file(s) should be saved, and then select the REPORTS > PERIODIC > EARNED INCOME TAX FILE menu item to generate the file(s), the County option is selected automatically to create the submission file. Refer to the Act32 Samples document to aid you in setting up the EMPLOYER PARAMETERS > LOCAL TAX information. Revised: 10/09/ Central Susquehanna Intermediate Unit, USA Page 2

7 Setting Up EIT for Act 32 Reporting ACT 32 PSD CODE SETUP Municipalities Directory Use the DIRECTORIES > MUNICIPALITIES directory to identify the locations where all your staff members live and work. Prior to enacting Act 32, employers were to withhold the employee's EIT tax at the correct rate; however, reporting requirements provided no enforcement of the tax rules. You may be currently withholding the correct EIT rate for every employee, but still need to make some changes due to the new reporting mandates. Depending upon the way the MUNICIPALITIES directory was set up, you changes may range from simple entry of the PSD code for each existing MUNICIPALITIES directory record, to a complete redesign of how Munic Codes are created, to the need for many new MUNICIPALITIES directory records. Understanding the PSD Code Assignments The state-assigned Political Sub Division (PSD) codes identify both school districts where employees work and townships or boroughs where employees live. A MUNICIPALITIES directory record is needed for EACH of the school districts where your staff members live. It is not necessary to set up a code for every PSD in the state. Revised: 10/09/ Central Susquehanna Intermediate Unit, USA Page 3

8 Setting Up EIT for Act 32 Reporting Because a township can be spread across multiple school districts, we recommend (but don't require) that you adopt the following four-character Munic Code format when setting up your new MUNICIPALITIES directory records. 1. Identify a two-character reference for each of the school districts where your staff members live. 2. After you have determined the school district reference for the four-character Munic Code, add the last two digits of the PSD code for that Tax Collection District/School District/Municipality Name. 3. Enter the Township name in the Name field. For example: In the list of PSD codes on the preceding page, three school districts are displayed (Fairfield, Gettysburg, and Littlestown Areas). The codes 'FA' (Fairfield Area), 'GA' (Gettysburg Area), and 'LA' (Littlestown Area) can be used (for step 1). Then add the last two digits of the PSD code for the municipality (for step 2). Enter the Township in the Name field (for step 3). Using the three steps above for Mt. Joy Township, which spans Gettysburg Area and Littlestown Area school districts (therefore two directory records are needed), the following Munic Codes would be created for those MUNICIPALITIES directory records. Munic Code Name PSD code GA06 Mt. Joy Twp LA04 Mt. Joy Twp Employee Master/Tax Info After all the needed MUNICIPALITIES directory records are added, select the appropriate Munic Code from the Twp Live drop down list box for each employee on the UPDATE SCREENS > EMPLOYEE MASTER/TAX INFO tab. Use the Certificate of Residency form to identify the correct Munic Code where that employee lives. The Municipality name and the PSD code automatically display to the right of the Munic Code that you selected from the Twp Live field. When to Change the Employee Master A second W2 is generated only when the quantity of reportable information exceeds available space on the W2 form. Presently, the W2 can accommodate only two local tax entries. Therefore, make any changes to the EMPLOYEE MASTER/TAX INFO tab's Twp Live field AFTER the last pay in the calendar year, BUT BEFORE the first payroll in the next calendar year; otherwise, CHECK HISTORY will need to be corrected for any information that had not been updated. We recommend that, as needed, you update the Twp Live field AFTER the last pay in the calendar year, but BEFORE the first pay in the next calendar year. Revised: 10/09/ Central Susquehanna Intermediate Unit, USA Page 4