Compiled by Robert W. Ditmer,
CPP
ADDENDUM-
A Brief Word on the Emergency and Municipal Services Tax (EMST)
In addition to the Earned Income Tax, employers must also withhold the Emergency and Municipal Services Tax from each employee’s payroll. The administration of this tax is much simpler than the EIT, and it must be withheld only once a year.
In 2004 the Pennsylvania Legislature passed Act 222, which amended Act 511 of 1965. Prior to this time, municipalities could impose an Occupational Privilege Tax (OPT) on all individuals who worked in the municipality. The maximum amount was $10 per year, and an individual who worked in Pennsylvania could only have it withheld once a year by one employer. If the individual worked for more than one employer during the year, he or she only had to provide proof that the tax had been paid, and any additional employers could not withhold the tax.
The EMST replaced the OPT beginning January 1, 2005, and the maximum amount of the EMST was raised to $52 per year. However, increasing the tax rate was optional for municipalities, and not all municipalities opted to increase the tax rate from $10 to $52. Therefore, employers must determine the EMST rate from the tax register, which can be accessed using the same method described above for the EIT.
Probably the most common question I am asked regarding the EMST is how much to withhold if an employee has more than one employer during the year. The simple answer is to withhold the maximum amount required by the municipality where the employee works minus any amount the employee has already paid. For instance, if the employee’s first employer was located in a municipality that imposed a $10 EMST, and the employee’s second employer is located in a municipality that imposes a $52 EMST, the second employer should withhold the difference of $42. However, if the first employer withheld $52 and the rate for the second employer is only $10, the second employer does not withhold anything, but the employee does not receive a refund of the $42 difference.
The Governor’s Center for Local Government Services website contains a very clear and comprehensive description of the EMST, and the information contained there should answer most questions. The link for the EMST is http://www.newpa.com/default.aspx?id=257.
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