[Adopted 12-29-2004 by Ord. No. 1192; amended in its entirety 12-3-2007 by Ord. No. 1230, approved 12-3-2007]
Editor's Note: The Mayor allowed this ordinance to go into effect without his approval.
Title. This article shall be known and may be cited as the "Local Services Tax (LST) Ordinance."
Purpose. This article shall levy a tax for the privilege of engaging in an occupation within the Borough of Middletown; requiring employers to register and collect the tax; prescribing requirements for returns and records; conferring powers and duties upon the Tax Collector; and imposing penalties.
Unless otherwise expressly stated, for the purpose of this Article V, the following terms shall have the meanings below:
- The person or persons appointed by this article or by subsequent enactment or the Borough Council to collect the tax imposed by this article.
- A corporation, political subdivision, association, company, firm or individual with a principal location or office within the corporate limits of the Borough of Middletown.
- Salary, wages, commission, tip, bonus, fee, or any other payment or earned income, including net profits from sources within the political subdivision of the Borough of Middletown.
- PLACE OF EMPLOYMENT
- The location of the taxpayer's principal place of employment or location of the principal office on the date the taxpayer earns more than $12,000 in the annual year.
- The Local Services Tax (LST) imposed by this article.
- TAX YEAR
- January 1 through and including December 31.
- An individual employed within the corporate limits of the Borough of Middletown.
Under the authority of the Local Tax Enabling Act, as amended from time to time (hereinafter "the Act"), in addition to other taxes levied and collected in the Borough of Middletown, there is hereby imposed, for the purposes authorized in the Act, a local services tax (hereinafter "LST") of $52 upon every taxpayer employed within the corporate limits of the Borough of Middletown.
Editor's Note: See 53 P.S. § 6924.101 et seq.
In the event a taxpayer otherwise subject to this LST is employed at multiple locations in the Commonwealth, more than one of which imposes this LST, the Borough of Middletown shall have priority to collect such tax when the taxpayer's place of employment is located within the Borough.
The Tax Collector elected or designated by the Borough to collect the LST shall collect the LST from employers in accordance with the requirements of the Local Tax Enabling Act, as amended.
Failure of an employer to make payment as required herein shall result in the assessment of a penalty in the amount of 10%, plus costs of suit and reasonable attorneys fees of 5%, if required.
The LST levied herein, together with all penalties, shall be recoverable by the Tax Collector in the manner authorized by the Local Tax Enabling Act.
If the Middletown Area School District has an LST in effect, the School District may collect from taxpayers, in accordance with the terms of the Local Tax Enabling Act, as amended, an amount no greater than was in effect at the time of the passage of the herein article. The difference between the total LST owed hereunder and the amount collected by the School District shall be payable to the Borough of Middletown, unless otherwise agreed between the Borough and the School District.
Every employer not registered under the provisions of an enactment of the taxing authority imposing a tax on earned income and net profits shall, within 30 days after the effective date, or within 30 days after first becoming an employer, register with the Collector the employer's name, address and any other information required by the collector on an employer registration form prescribed by the Collector.
Every employer is required to deduct the tax as set forth in the regulations from any compensation payable to any employee on whom the tax is imposed, unless the employee has filed a local services tax withholding exemption certificate in accordance with the regulations. As set forth in the regulations, the full amount of the tax shall be deducted in lump sum if the combined municipal and school district tax rate is $10 or less. As set forth in the regulations, the tax shall be deducted pro rata on a per-payroll basis if the combined municipal and school district tax rate exceeds $10.
As set forth in the regulations, no employee is required to pay LST through more than one employer during any payroll period.
An employer is excused from withholding to the extent provided in the regulations if the employee has filed a local services tax withholding exemption certificate in accordance with the regulations. The exemption certificate may provide exemption from withholding based on:
Low income or other exemption from tax as stated in the regulations;
Withholding by another principal employer;
Prior payment to the taxing authority of the full amount of the tax imposed by the taxing authority; or
Prior payment during the same tax year of $52 as a tax imposed under the enabling act on an individual based on engaging in an occupation in Pennsylvania.
If an employee has filed a local services tax withholding exemption certificate and it is determined as set forth in the regulations that the employee is not eligible for exemption or no longer eligible for exemption, the employer shall start or restart withholding as set forth in the regulations.
As to each taxpayer employed at any time after the effective date and on or before March 31, every employer shall deduct the tax from compensation payable to the taxpayer as set forth in the regulations, and shall file a tax return and pay to the Collector on or before April 30 the amount of tax deducted on or before March 31. As to each taxpayer for whom the full amount of the tax has not previously been deducted or paid directly by the taxpayer to the Collector, who is employed at any time in any of the three-month periods ending June 30, September 30, and December 31, every employer shall deduct the tax from compensation payable to the taxpayer as set forth in the regulations, and shall file a tax return and pay to the Collector on or before the following July 30, October 30, and January 30, the amount of tax deducted on or before June 30, September 30, and December 31, respectively. Every employer shall follow this same procedure in every. tax year.
Tax amounts deducted from compensation by an employer shall at all times be the property of the taxing authority, and shall constitute a trust fund held by the employer until remitted to the Collector; and deduction of tax from wages shall, as between the employee and the taxing authority, constitute payment of the tax by the employee, regardless of any insolvency or failure to remit by the employer.
Any employer who fails to deduct the tax or who fails to pay the tax to the Collector shall be liable for the tax and applicable penalties in full as though the tax had originally been imposed against such employer. If the employer is a partnership, the partners thereof, and if the employer is a corporation, limited liability company, or other organization or entity, all officers thereof, and any other person responsible for payment of taxes, shall have the same liability as the employer.
Every individual who is self-employed, or whose tax for any other reason is not deducted by an employer under § 243-42 of this article, shall file a tax return and pay the tax directly to the Collector. Except as otherwise stated in the regulations, every such individual engaged in an occupation within the taxing authority at any time after the effective date and on or before March 31, shall file a tax return and pay the full amount of the tax to the Collector on or before April 30. Except as otherwise stated in the regulations, every such individual who has not previously paid the full amount of the tax who engages in an occupation within the taxing authority at any time in any of the three-month periods ending June 30, September 30, and December 31, shall file a tax return and pay the full amount of the tax to the Collector on of before the following July 30, October 30, and January 30, respectively. Every individual who is self-employed, or whose tax for any other reason is not deducted by an employer under § 243-42 of this article, shall follow this same procedure in every tax year.
The Collector shall collect the tax, fines and penalties imposed by this article, and shall keep records of collection.
The Collector may examine the books, papers, and records of any individual or employer in order to verify compliance with this article. Every individual the Collector believes might be subject to the tax and every employer or person the Collector believes might be an employer shall on request meet with and show to the Collector all books, papers, and records requested by the Collector. Every employer or person the Collector believes might be an employer shall also provide access to the employer's books, papers, and records at the employer's place of business and provide a place for the Collector's review of such books, papers, and records. For purposes of this article, records shall include records in any form, including computer and other electronic records.
The Collector may file suit in its name or in the name of the taxing authority for recovery of any amount owed to the taxing authority.
Except as limited by any applicable law, the Collector shall have all of the powers that the taxing authority has or that the law prescribes for Tax Collectors relating to administration and enforcement of this article.
The Collector may promulgate and enforce regulations relating to administration and enforcement of this article.
The Lancaster County Tax Collection Bureau, also doing business as Middletown Area Tax Collection Bureau, is appointed Collector according to the terms of a Tax Collection Agreement as presented this date or previously executed. The officers of this taxing authority are authorized to take any actions necessary or appropriate to carry out the terms of this article and the tax collection agreement.