CLEARFIELD – On July 2, 2008 the Pennsylvania Legislature enacted Act 32 of 2008 to amend the Local Tax Enabling Act, Act 511 of 1965, to consolidate the collection of Earned Income Tax (EIT) on a countywide basis. The passage of this legislation by the legislative bodies in Harrisburg mandated that county commissioners in most of the 67 counties in the Commonwealth of Pennsylvania will initiate the process by notifying all municipalities and school districts within their county to appoint a delegate and an alternate to serve on a countywide Tax Collection Committee. While the county commissioners are charged with the duty of setting up the initial roster of delegates and alternates for each municipality and school district within the county, the decision of who will be the delegate and the alternate is at the full discretion of the governing body of the municipality or school district.
Once each municipality and school district has notified the county commissioners of their choice of delegate and alternate, the county will then schedule the Commonwealth of Pennsylvania Department of Community and Economic Development, DCED, to come into the county and conduct training for the delegates and alternates that will serve on the Tax Collection Committee. The final responsibility of the county commissioners is to schedule the organizational meeting of the Tax Collection Committee by November 15th, 2009. Once the organizational meeting is called to order by the chairman of the board of county commissioners, the first order of business will be for the delegates to elect a chairman for the Tax Collection Committee from the roster appointed delegates. When the chairman of the Tax Collection Committee is seated, the county commissioners have fulfilled their duties mandated by Act 32 and they have no additional authority or duties to perform.
In response to the confusion that some of the municipal government leaders and school boards in Clearfield County are having with Act 32, Clearfield County Commissioners Joan Robinson McMillen, John Sobel and Mark McCracken issued the following joint statement: “We want to clear up any misunderstandings that our township supervisors, city / borough council members, school directors and tax collectors may have in regards to Act 32. Please be advised that our request to have you appoint people to serve as delegates to a county Tax Collection Committee was mandated by the Commonwealth of Pennsylvania. This was not a decision enacted at the county level and county government is not taking over the collection of Earned Income Tax. The decision on what entity will collect the Earned Income Tax in the future will be decided by the appointed delegates of the Tax Collection Committee – the county commissioners will have no say in the matter”.
The following information along with other important information on Act 32 is available on the DCED Web site.
Act 32 enacted on July 2, 2008 amends the Local Tax Enabling Act, Act 511 of 1965, to consolidate the collection of Earned Income Tax (EIT) on a countywide basis. The Act is a result of a 2004 report published by the Department of Community and Economic Development (DCED) – a three year study that documented the fragmentation, complexity and inefficiency of the earned income collection system.
Under the current EIT system, 560 taxing authorities collect nearly $1.9 billion in annual revenue for more than 2,900 local taxing jurisdictions. Pennsylvania currently has more taxing jurisdictions levying a local income tax than all other states combined. Due to inefficiencies in this system, it was estimated that as much as $237 million is lost annually. These are revenues that should be available to municipalities and school districts under current tax rates.
Additionally, the current system creates a burden on employers that leads to an increase in the cost of conducting business within the Commonwealth. The administration of the tax is fragmented, confusing and often unfair to taxpayers.
By reducing the number of collectors from 560 to 69, the local tax collection system will be streamlined and more efficient. Overhead will be reduced and tax revenues will be transferred more efficiently and expediently. Uniform forms and procedures required by the legislation will add to consistent and uniform collection.
Finally, enacted tracking, auditing and oversight requirements will provide accountability and add financial safeguards needed to restore integrity and transparency to the system.