[Adopted 5-17-2004 by Ord. No. 288[1]]
[1]
Editor's Note: This ordinance also repealed
former Art. VII, Earned Income Tax, adopted 3-28-1988 by Ord. No.
183, as amended.
This article shall be known as the "Earned Income
Tax Ordinance." The provisions hereof shall become effective on the
1st day of January, 2004 A.D. and the tax shall continue in force
on a calendar-year or a taxpayer fiscal-year basis, without annual
reenactment, unless the rate of the tax is subsequently changed. Changes
in rate become effective on the date specified in the amending ordinance.
As used in this article, the following terms
shall have the meanings indicated:
A partnership, limited partnership, or any other unincorporated
group of two or more persons.
The Board of Supervisors of the Township of Richland.
Any enterprise, activity, profession or any other undertaking
of an unincorporated nature conducted for profit, or ordinarily conducted
for profit, whether by a person, partnership, association, or any
other entity.
A corporation or joint stock association organized under
the laws of the United States, the Commonwealth of Pennsylvania, or
any other state, territory, foreign country or dependency.
The calendar year for which the tax is levied.
The place where one lives and has his permanent home and
to which he has the intention of returning whenever he is absent.
Actual residence is not necessarily domicile, for domicile is the
fixed place of abode which, in the intention of the taxpayer, is permanent
rather than transitory. Domicile is the voluntarily fixed place of
habitation of a person, not for a mere special or limited purpose,
but with the present intention of making a permanent home, until some
event occurs to induce him to adopt some other permanent home. In
the case of businesses, or associations, the domicile is that place
considered as the center of business affairs and the place where its
functions are discharged.
Compensation, including salaries, wages, commissions, bonuses
and incentive payments whether based on profits or otherwise, fees,
tips and similar remuneration for services rendered, whether in cash
or in property, such as:
Items of remuneration received, directly or
through an agent, in cash or in property, based on payroll periods
or piecework, for services rendered as an employee or casual employee,
agent or officer of an individual, partnership, business or nonprofit
corporation, or government agency. These items include salaries, wages,
commissions, bonuses, stock options, incentive payments, fees, tips,
dismissal, termination or severance payments, early retirement incentive
payments and other additional compensation contingent upon retirement,
including payments in excess of the scheduled or customary salaries
provided for those who are not terminating service, rewards, vacation
and holiday pay, paid leaves of absence, payments for unused vacation
or sick leave, tax assumed by the employer, signing bonuses, amounts
received under employee benefit plans and deferred compensation arrangements.
Scholarships, stipends, grants and fellowships,
if services are rendered in connection therewith.
When used in this subsection, the following
words have the following meanings, unless the context clearly indicates
otherwise:
FELLOWSHIP STIPEND or FELLOWSHIP AWARDA fixed sum of money paid periodically for services or to defray expenses to a graduate student who is enrolled in a graduate degree program at a university.
GRANT-IN-AIDFinancial support given by a public agency or private institution to an individual to further the individual's education.
POSTDOCTORAL RESEARCH FELLOWSHIP STIPEND or POSTDOCTORAL RESEARCH FELLOWSHIP AWARDA fixed sum of money paid periodically for service or to defray expenses of an individual who has obtained a doctoral degree at a university and is conducting research at a research facility.
SCHOLARSHIPA grant-in-aid to a student.
Other forms of remuneration characterized as
taxable compensation by the Tax Reform Code of 1971, as amended, and
its implementing regulations, as amended, and any future amendments
to said Code and/or its implementing regulations.
Compensation does not include:
Periodic payments for sickness and disability
other than the regular wages received during a period of sickness
or disability;
Disability, retirement or other payments arising
under workmen's compensation acts, occupational disease acts and similar
legislation by any government;
Payments commonly recognized as old age or retirement
benefits paid to persons retired after reaching a specific age or
after a stated period of employment;
Payments commonly known as "public assistance,"
or unemployment compensation payments by any governmental agency;
Payments to reimburse actual expenses;
Payments made by employers or labor unions for
employee benefit programs covering hospitalization, sickness, disability
or death, supplemental employment benefits or strike benefits, subject
to certain conditions identified in the Tax Reform Code of 1971, as
amended, and its implementing regulations;
Any compensation received by United States servicemen
serving in a combat zone;
Payments received by a foster parent for in-home
care of foster children from an agency of the commonwealth or a political
subdivision thereof, or an organization tax exempt from federal tax
under § 501(c)(3) of the Internal Revenue Code of 1954,
which is licensed by the Commonwealth or a political subdivision thereof
as a placement agency;
Payments made by employers or labor unions for
employee benefit programs covering social security or retirement;
or
Personal use of an employer's owned or leased
property or of employer-provided services.
A person, partnership. association, corporation, institution,
governmental body or unit or agency, or any other entity employing
one or more persons for a salary, wage, commission or other compensation.
Person, public employee or private agency designated by the
governing body to collect and administer the tax on earned income
and net profits.
The net income from the operation of a business,
profession, or other activity, except corporations, after provision
for all costs and expenses incurred in the conduct thereof, determined
either on a cash or accrual basis in accordance with generally accepted
accounting principles and practices, as defined in the Tax Reform
Code of 1971, as amended, its implementing regulations, and any subsequent
amendments to said Code and/or regulations. Net profits do not include
income which is not paid for services provided and which is in the
nature of earnings from an investment.
To constitute net profits, all of the following
must apply:
The gross profits shall be derived from one
of the following:
The marketing of a product or service to customers
on a commercial basis or from securities employed as working capital
in the business operations.
Accounts and notes receivable from sales of
products or services in the ordinary course of the business operations.
Assets which serve an operational function in
the ordinary course of business, operations.
The marketing activity shall be conducted with
the manifest objective of achieving profitable operations.
The marketing objective shall be conducted with
regularity and continuity and may not be limited or exclusive
In computing net profits, a deduction will not
be allowed for any item of cost, expense or liability derived or incurred
in connection with, or attributable to, any of the following:
The ownership or disposition of assets that
are held for investment purposes or otherwise serve an investment
function.
The trading in securities for personal purposes
and not for the accounts of customers.
The sale, discontinuation or abandonment of
a business or segment thereof.
Any tax imposed on, or measured by, gross or
net earned or unearned income.
An isolated or nonrecurring transaction which
is not a normal or routine business activity.
Choosing to form a partnership or other entity
or to associate with others, receiving and reporting income or gain
as the income of the partnership, entity or associates or dividing
the same among its partners, beneficial owners or associates or the
trading in securities for the benefit of shareholders, partners, members
or associates does not of itself make the income of the partnership,
entity or associates net profits.
For purposes of this section, only the following
participants in the stock, securities, options, derivatives, futures
or commodities market are engaged in marketing of a product or service
to customers:
Those who maintain or provide a marketplace
or facilities for bringing together purchasers and sellers of these
financial investment products
Those who are licensed to act as their customer's
agents and charge a negotiated commission for executing transactions
and do not take time to the particular portion they buy or sell.
Those who devote managerial attention to the
financial investment products holdings of others, or who employ other
persons to assist them in that management, in the capacity of a licensed
investment advisor.
Licensed dealers, including financial investment
product specialists and market makers, if the conditions in (a) through
(d) below are met:
The dealer maintains an inventory of financial
investment products with the objective of reselling his inventories
at a profit to customers or operates as a specialist or market maker.
The dealer makes market by quoting the bid and
ask prices at which he is willing to buy and sell the financial investment
products and by buying directly from or selling directly to customers.
The dealer's profit is determined in whole or
in part by a markup based on cost.
The dealer elects to inventory securities held
for resale to customers or uses the mark-to-market system of accounting.
Underwriters who facilitate initial sales of
financial investment products by acting either as licensed dealers
in a principal capacity or as brokers in an agency capacity.
When a person operates as an investor or trader
with respect to a portion of that person's activities and as a market
establishment, broker, investment counselor or dealer with respect
to the rest, this section applies only to the operations as a market
establishment, broker, investment counselor or dealer.
For taxpayers engaged in the business, profession
or activity of farming, the term shall not include:
Any interest earnings generated from any monetary
accounts or investment instruments of the farming business;
Any gain on the sale of farm machinery;
Any gain on the sale of livestock held 12 months
or more for draft, breeding or dairy purposes; and
Any gain on the sale of other capital assets
of the farm.
A person, partnership, association or other entity domiciled
outside the taxing district.
A natural person.
The calendar year before the current year.
A person, partnership, association or other entity domiciled
in the taxing district.
The calendar year following the current year.
The Township of Richland, Cambria County, Pennsylvania.
A person, partnership, association, or any other entity,
required hereunder to file a return of earned income or net profits,
or to pay a tax thereon.
A.
A tax for general revenue purposes is hereby reimposed
in the amount of 1% earned income received and net profits earned
by residents and nonresidents of the Township of Richland, beginning
on the first day of January, 2004, and continuing for each taxable
year thereafter.
B.
Except as otherwise provided in § 14 of
the Local Tax Enabling Act, 53 P.S. § 6914, as amended,
allowing for crediting or deductions for duplication of taxes, in
the event the school district in which the Township is situate shall
impose or continue to impose an earned income tax under the authority
of the Act on residents or businesses domiciled within that Township
during the same year or part of year, then the tax herein imposed
shall be subject to the sharing provision from the day such duplication
becomes effective.
A.
Net profits.
(1)
Every taxpayer making net profits shall, on or before
April 15 of the current year, make and file with the Officer on a
form prescribed or approved by the Officer, a declaration of his estimated
net profits during the period beginning January 1 and ending December
31 of the current year, and pay to the Officer in four quarterly installments,
as nearly equal as possible, the tax due thereon as follows: The first
installment at the time of filing the declaration, and the other installments
on or before June 15 of the current year, September 15 of the current
year, and January 15 of the succeeding year, respectively.
(2)
Any taxpayer who first anticipates any net profit
after April 15 of the current year shall make and file the declaration
hereinabove required on or before June 15 of the current year, September
15 of the current year, or December 31 of the current year, whichever
of these dates next follows the date on which the taxpayer first anticipates
such net profit, and pay to the Officer in installments, as nearly
equal as possible, the tax due thereon, on or before the quarterly
payment dates which remain after the filing of the declaration.
(3)
Every taxpayer shall, on or before April 15 of the
succeeding year, make and file with the Officer on a form prescribed
or approved by the Officer a final return and reconciliation showing
the amount of net profits earned during the period beginning January
1 of the current year and ending December 31 of the current year,
the total amount of tax due thereon and the total amount of tax paid
thereon. At the time of filing the final return, the taxpayer shall
pay to the Officer the balance of the tax due or shall make demand
for refund or credit in the case of overpayment. Any taxpayer may,
in lieu of paying the fourth quarterly installment of his estimated
tax. elect to make and file with the Officer on or before January
31 of the succeeding year, the final return as hereinabove required.
(4)
The officer is hereby authorized to provide by regulation
for the making and filing of adjusted declarations of estimated net
profits, and for the payments of the estimated tax in cases where
a taxpayer who has filed the declaration hereinabove required anticipated
additional net profits not previously declared or finds that he has
overestimated his anticipated net profits.
(5)
Every taxpayer who discontinues business prior to
December 31 of the current year shall, within 30 days after the discontinuance
of business, file his final return as hereinabove required and pay
the tax due.
B.
Earned income.
(1)
Annual earned income tax return. Every taxpayer shall,
on or before April 15 of the succeeding year, make and file with the
Officer on a form prescribed or approved by the Officer a final return
showing the amount of earned income received during the period beginning
January 1 of the current year and ending December 31 of the current
year. Such final return shall also show the total amount of tax due
thereon, the amount of tax paid thereon, and the amount of tax thereon
that has been withheld pursuant to the provisions relating to the
collection at source and the balance of tax due. At the time of filing
the final return, the taxpayer shall pay the balance of the tax due
or shall make demand for refund or credit in the case of overpayment.
(2)
Earned income not subject to withholding. Every taxpayer
who is employed for a salary, wage, commission, or other compensation
and who received any earned income not subject to the provisions relating
to collection at source shall make and file with the Officer on a
form prescribed or approved by the Officer a quarterly return on or
before April 30 of the current year, July 31 of the current year,
October 31 of the current year, and January 31 of the succeeding year,
setting forth the aggregate amount of earned income not subject to
withholding by him during the three-month periods ending March 31
of the current year, June 30 of the current year, September 30 of
the current year, and December 31 of the current year, respectively,
and subject to the tax, together with such other information as the
Officer may require. Every taxpayer making such returns shall, at
the time of filing thereof, pay to the Officer the amount of tax shown
as due thereon.
C.
Death of taxpayer. In the event of the death of a
taxpayer during a taxable period, his personal representative shall
file his return on or before the 15th day of April of the year following
the date of death and on or before such date shall pay any tax due
from such deceased taxpayer under this article or demand refund in
the case of overpayment.
D.
Guardian of taxpayer. Should a guardian of the estate
be appointed for a taxpayer such guardian shall be imputed with the
same duties and responsibilities as the taxpayer would have regarding
the reporting and paying of taxes under this article.
A.
Every employer having an office, factory, workshop,
branch, warehouse, or other place of business within the Township
who employs one or more persons, other than domestic servants, for
a salary, wage, commission or other compensation, who has not previously
registered, shall, within 15 days after becoming an employer, register
with the Officer his name and address and such other information as
the Officer may require.
B.
Every employer having an office, factory, workshop,
branch, warehouse, or other place of business within the Township
who employs one or more persons, other than domestic servants, for
a salary, wage, commission, or other compensation, shall deduct at
the time of payment thereof the tax imposed by this article on the
earned income due to his employment and shall, on or before April
30 of the current year, July 31 of the current year, October 31 of
the current year, and January 31 of the succeeding year, file a return
and pay to the Officer the amount of taxes deducted during the preceding
three-month periods ending March 31 of the current year, June 30 of
the current year, September 30 of the current year, and December 31
of the current year, respectively. Such return, unless otherwise agreed
upon between the Officer and the employer, shall show the name and
social security number of each such employee, the earned income of
such employee during such preceding three-month period, the tax deducted
therefrom, the political subdivisions imposing the tax upon such employee,
the complete address of each and every employee subject to withholding,
the total earned income of all such employees during such preceding
three-month period, and the total tax deducted therefrom and paid
with the return. Any employer who for two of the preceding four quarterly
periods has failed to deduct the proper tax, or any part thereof,
or has failed to pay over the proper amount of tax to the taxing authority,
may be required by the Officer to file his return and pay the tax
monthly. In such cases, payments of tax shall be made to the Officer
on or before the last day of the month succeeding the month for which
the tax was withheld.
C.
On or before February 28 of the succeeding year, every
employer shall file with the Officer:
(1)
An annual return showing the total amount of earned
income paid, the total amount of tax deducted, and the total amount
of tax paid to the Officer for the period beginning January 1 of the
current year and ending December 31 of the current year.
(2)
A return withholding statement for each employee employed
during all or any part of the period beginning January 1 of the current
year and ending December 31 of the current year, setting forth the
employee' s name, address and social security number, the amount of
earned income paid to the employee during said period, the amount
of tax deducted, the political subdivisions imposing the tax upon
such employee, and the amount of tax paid to the Officer. Every employer
shall furnish two copies of the individual return to the employee
for whom it is filed.
D.
Every employer who discontinues business prior to
December 31 of the current year shall, within 30 days after the discontinuance
of business, file the returns and withholding statements hereinabove
required and pay the tax due.
E.
Except as otherwise provided herein, every employer
who willfully or negligently fails or omits to make the deductions
required by this section shall be liable for payment of the taxes
which he was required to withhold to the extent that such taxes have
not been recovered from the employee.
F.
Notwithstanding the foregoing, no employer shall be
held liable for failure to withhold earned income taxes or for the
payment of such withheld tax money to a political subdivision other
than the Township if such failure to withhold or such incorrect transmittal
of withheld taxes arises from incorrect information as to the employee's
place of residence submitted by the employee, nor shall an employer
be liable for failure to withhold earned income taxes or to make reports
of wages. salaries, commissions or other compensation of his/its employees
unless the official continuing register of all earned income taxes
levied under the authority of the Local Tax Enabling Act, as amended,
maintained and supplemented annually by the Department of Community
and Economic Development, lists the Township's levying of the earned
income tax.
G.
The failure or omission of any employer to make the
deductions required by this section shall not relieve any employee
from the payment of tax or from complying with the requirements of
the article relating to the filing of declarations and returns.
A.
The Board, by resolution, shall appoint the Officer.
B.
It shall be the duty of the Officer to collect and
receive the taxes, fines and penalties imposed by this article. It
shall also be his duty to keep a record showing the amount received
by him from each person or business paying the tax and the date of
such receipt.
C.
Each Officer, before entering upon his official duties,
shall give and acknowledge a bond to the Township. If the Township
shall by ordinance, designate any bond previously given by the Officer
as adequate, such bond shall be sufficient to satisfy the requirements
of this subsection.
(1)
Each such bond shall be joint and several with one
or more corporate sureties, which shall be surety companies authorized
to do business in this commonwealth and duly licensed by the Insurance
Commissioner of this commonwealth.
(2)
Each bond shall be conditioned upon the faithful discharge
by the Officer, his clerks, assistants and appointees of all trusts
confided in him by virtue of his office, upon the faithful execution
of all duties required of him by virtue of his office, upon the just
and faithful accounting or payment over, according to law, of all
monies and all balances thereof paid to, received or held by him by
virtue of his office and upon the delivery to his successor or successors
in office of all books, papers, documents, or other official things
held in right of his office.
(3)
Each such bond shall be taken in the name of the Richland
Township and shall be for the use of the Township appointing the Officer,
and for the use of such other person or persons for whom money shall
be collected or received or as his or her interest shall otherwise
appear, in case of a breach of any of the conditions thereof by the
acts or neglect of the principal of the bond.
(4)
The Township or any person may sue upon the said bond
in its own or his own name for its or his own use.
(5)
Each such bond shall contain the name or names of
the surety company or companies bound thereon. The Township shall
fix the amount of the bond at an amount equal to the maximum amount
of taxes which may be in the possession of the Officer at any given
time. The Township may at any time, upon cause shown and due notice
to the Officer, and his surety or sureties, require or allow the substitution
or the addition of a surety company acceptable to the Township for
the purpose of making the bond sufficient in amount, without releasing
the surety or sureties first approved from any accrued liability or
previous action on such bond. The Township shall designate the custodian
of the bond required to be given by the Officer.
D.
The Officer charged with the administration and enforcement
of the provisions of the article is hereby empowered to prescribe,
adopt, promulgate, and enforce, rules and regulations relating to
any matter pertaining to the administration and enforcement of this
article, including provisions for the re-examination and correction
of declarations and returns, and of payments alleged or found to be
incorrect, or as to which any overpayment is claimed or found to have
occurred, and to make refunds in case of overpayment for any period
of time not to exceed six years subsequent to the date of payment
of the sum involved, and to prescribe forms necessary for the administration
of the article. No rule or regulation of any kind shall be enforceable
unless it has been approved by ordinance by the Board. A copy of such
rules and regulations currently in force shall be available for public
inspection.
E.
The Officer shall refund, on petition of and proof
by the taxpayer, earned income tax paid on the taxpayer's ordinary
and necessary business expenses to the extent that such expenses are
not paid by the taxpayer' s employer.
F.
The Officer and any agent designated by him are hereby
authorized to examine the books, papers, and records of any employer
or of any taxpayer, or of any person whom the Officer reasonably believes
to be an employer or taxpayer, in order to verify the accuracy of
any declaration or return or, if no declaration or return was filed,
to ascertain the tax due. Every employer and every taxpayer, and every
person whom the Officer reasonably believes to be an employer or taxpayer,
is hereby directed and required to give to the Officer, or to any
agent designated by him, the means, facilities and opportunities for
such examination and investigation as hereby authorized. The Officer
shall have such power to subpoena books, records and papers of the
employer or taxpayer as may be found in authority of the Commonwealth
of Pennsylvania.
G.
Any information gained by the Officer, his agents,
or by any other official or agent of the Township as a result of any
declarations, returns, investigations, hearings or verifications required
or authorized by the article, shall be confidential, except for official
purposes and except in accordance with a proper judicial order, or
as otherwise provided by law.
H.
The Officer is authorized to establish different filing,
reporting and payment dates for taxpayers whose fiscal years do not
coincide with the calendar year.
A.
The Officer may sue in the name of the Township for
the recovery of taxes due and unpaid under this article.
B.
Any suit brought to recover the tax imposed by this
article shall be begun within three years after such tax is due, or
within three years after the declaration or return has been filed,
whichever date is later; provided, however, that this limitation shall
not prevent the institution of a suit for the collection of any tax
due or determined to be due in the following cases:
(1)
Where no declaration or return was flied by any person
although a declaration or return was required to be filed by him under
provisions of the article, there shall be no limitation.
(2)
Where an examination of the declaration or return
filed by any person, or of other evidence relating to such declaration
or return in the possession of the Officer, reveals a fraudulent evasion
of taxes, there shall be no limitation.
(3)
Tn the case of substantial understatement of tax liability
of 25% or more and no fraud, suit shall be begin within six years.
(4)
Where any person has deducted taxes under the provisions
of this article and has failed to pay the amounts so deducted to the
Officer, or where any person has willfully failed or omitted to make
the deductions required by this section, there shall be no limitation.
(5)
This section shall not be construed to limit the Board
from recovering delinquent taxes by arty other means provided by the
Act.
C.
The Officer may sue for recovery of an erroneous refund,
provided such suit is begun within two years after making such refund,
except that the suit may be brought within five years if it appears
that any part of the refund was induced by fraud or misrepresentation
of material fact.
A.
If for any reason the tax is not paid when due, interest
at the rate of 6% per annum on the amount of said tax and an additional
penalty of 1/2 of 1% of the amount of the unpaid tax for each
month or fraction thereof during which the tax remains unpaid shall
be added and collected. Where suit is brought for the recovery of
any such tax, the person liable therefor shall, in addition, be liable
for the costs of collection and the interest and penalties herein
imposed.
B.
Notwithstanding the provisions of Subsection A, the Township may, by ordinance, establish a one-time period during which interest or interest and penalties that would otherwise be imposed for the nonreporting or underreporting of earned income tax liabilities or for the nonpayment of earned income taxes previously imposed and due shall be waived in total or in part if the taxpayer voluntarily files delinquent returns and pay the taxes in full during the period so established. The Township shall adopt regulations to implement the provisions of this subsection.
C.
The provisions of Subsection B shall not affect or terminate any petitions, investigations, prosecutions or other proceedings pending under the provisions of this article or event the commencement or further prosecution of any proceedings by the proper authorities for violations of this article, No proceedings shall, however, be commenced on the basis of delinquent returns filed pursuant to Subsection B if the returns are determined to be substantially true and correct and the taxes are paid in full within the prescribed time.
A.
Any person who fails, neglects, or refuses to make
any declaration or return required by this article; any employer who
fails, neglects or refuses to register or to pay the tax deducted
from his employees, or fails, neglects or refuses to deduct or withhold
the tax from his employees; any person who refuses to permit the Officer
or any agent designated by him to examine his books, records, and
papers; and any person who knowingly makes any incomplete, false or
fraudulent return, or attempts to do anything whatsoever to avoid
the full disclosure of the amount of his net profits or earned income
in order to avoid the payment of the whole or any part of the tax
imposed by this article, shall, upon conviction thereof before any
justice of the peace, alderman or magistrate, or court of competent
jurisdiction in Cambria County, be sentenced to pay a fine of not
more than $500 for each offense, and costs and, in default of payment
of said fine and costs, to be imprisoned for a period not exceeding
30 days.
B.
Any person who divulges any information which is confidential
under the provisions of the article shall, upon conviction thereof
before any district justice or court of competent jurisdiction, be
sentenced to pay a fine of not more than $500 for each offense, and
costs and, in default of payment of said fines and costs, to be imprisoned
for a period not exceeding 30 days.
C.
The penalties imposed under this section shall be
in addition to any other penalty imposed by any other section of the
article.
D.
The failure of any person to receive or procure forms
required for making the declaration or returns required by the article
shall not excuse him from making such declaration or return.
This article is adopted pursuant to the authority
conferred by the Act of December 31, 1965, P.L. 1257; 53 P.S. § 6901,
as amended.
It is hereby declared to be the intent of the
Board that this article replace in its entirety all prior ordinances
adopted, motions approved, or other actions taken by the Board of
Supervisors of the Richland Township levying an earned income tax,
and/or in any manner affecting the specific terms or provisions of
said earned income tax as levied; the provisions of which shall remain
in full force and effect for each year thereafter, without annual
reenactment, unless the rate of tax is subsequently changed.
