RULES AND REGULATIONS
DEPARTMENT OF REVENUE
[ 61 PA. CODE CH. 113 ]
Withholding of Tax
[48 Pa.B. 7214]
[Saturday, November 17, 2018]
The Department of Revenue (Department), under authority contained in section 354 of the Tax Reform Code of 1971 (72 P.S. § 7354), amends 61 Pa. Code § 113.4 (relating to time and place for filing reconciliation and withholding statements) to read as set forth in Annex A.
Purpose of Final-Form Rulemaking
The purpose of this final-form rulemaking is to improve the efficiency and accuracy of the Department's tax system by further automating the reporting of tax information.
Explanation of Regulatory Requirements
The final-form rulemaking amendments to § 113.4(c) reduce the threshold for the electronic transmission requirement of the annual reconciliation statement from 250 to 10 or more withholding statements (Form W-2). In addition, ''magnetic media'' will be deleted and replaced with ''electronic transmission.'' Electronic transmission is defined in subsection (d). This final-form rulemaking amends the method of filing for certain affected employers, not the information that is required to be reported. Finally, reference to specific form numbers in subsections (b) and (c) will be deleted. Given that form numbers change periodically, the Department is removing the numbers to avoid confusion and the forms are being referenced in accordance with § 2.12 (relating to forms) of the Pennsylvania Code & Bulletin Style Manual.
Employers and tax practitioners in this Commonwealth will be affected by the regulation.
Comment and Response Summary
Notice of proposed rulemaking was published at 47 Pa.B. 6726 (October 28, 2017). This final-form rulemaking is being adopted to read as set forth in Annex A.
The Department has prepared a comment and response document that covers the public comments and the comments of the Independent Regulatory Review Commission (IRRC) to the proposed rulemaking and the Department's responses thereto. It is available to interested parties by contacting Maria L. Miller, Office of Chief Counsel, Department of Revenue, P.O. Box 281061, Harrisburg, PA 17128-1061.
In its evaluation of provisions, during the proposal stage, the Department received comments from IRRC and the Pennsylvania Institute of Certified Public Accountants (PICPA). No official comments were received from either the House Finance Committee or the Senate Finance Committee. The following is a summary of the Department's response to the key issues referenced in the comments:
As requested by IRRC, the Department is adding more detailed information on the Regulatory Analysis Form (RAF) to support why the regulation is in the public interest.
To address the concerns of PICPA regarding notice to the public of the new electronic filing requirements, the Department is formalizing a communications plan to publish compliance information on the Department's web site, distribute information through the electronic filing system e-TIDES and conduct a mailing to non-eTIDES filers.
The Department has determined that the amendments in this final-form rulemaking will have minimal revenue effect on the Commonwealth. This final-form rulemaking is not designed to be revenue generating. It is an administrative processing change that will lower the Department's operating costs.
This final-form rulemaking will not create additional paperwork for the public or the Commonwealth. It will require certain employers to file their annual withholding reconciliation statements and accompanying wage and tax withholding statements by means of electronic transmission instead of on paper.
This final-form rulemaking will become effective upon publication in the Pennsylvania Bulletin. Its provisions will be applicable to annual withholding reconciliations statements that are required to be filed after the effective date of the regulation.
This final-form rulemaking is scheduled for review within 5 years of final publication. A sunset date has not been assigned.
The contact person for an explanation of the amendments is Maria L. Miller, Office of Chief Counsel, Department of Revenue, P.O. Box 281061, Harrisburg, PA 17128-1061.
Under section 5(a) of the Regulatory Review Act (71 P.S. § 745.5(a)), on October 18, 2017, the Department submitted a copy of the notice of proposed rulemaking, published at 47 Pa.B. 6726 and a copy of a RAF to IRRC and to the Chairpersons of the House Committee on Finance and the Senate Committee on Finance. In compliance with section 5(c) of the Regulatory Review Act, the Department also provided IRRC and the House and Senate Committees with copies of the comments received, as well as other documentation.
In preparing this final-form rulemaking, the Department has considered the comments received from IRRC and PICPA.
This final-form rulemaking was deemed approved by the House and Senate Committees on October 17, 2018, and was approved by IRRC on October 18, 2018, in accordance with section 5.1(e) of the Regulatory Review Act (71 P.S. § 745.5a(e)).
The Department of Revenue finds that:
(1) Public notice of intention to amend the regulations has been given under sections 201 and 202 of the act of July 31, 1968 (P.L. 769, No. 240) (45 P.S. §§ 1201 and 1202) and the regulations thereunder in 1 Pa. Code §§ 7.1 and 7.2.
(2) The amendments are necessary and appropriate for the administration and enforcement of the authorizing statute.
The Department, acting under the authorizing statute, orders that:
(1) The regulations of the Department, 61 Pa. Code Chapter 113, are amended by amending § 113.4 to read as set forth in Annex A.
(2) The Secretary of the Department shall submit this order and Annex A to the Office of General Counsel and Office of Attorney General for approval as to form and legality as required by law.
(3) The Secretary of the Department shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(4) This order shall take effect upon publication in the Pennsylvania Bulletin.
C. DANIEL HASSELL,
(Editor's Note: See 48 Pa.B. 7085 (November 3, 2018) for IRRC's approval order.)
Fiscal Note: Fiscal Note 15-459 remains valid for the final adoption of the subject regulation.
TITLE 61. REVENUE
PART I. DEPARTMENT OF REVENUE
Subpart B. GENERAL FUND REVENUES
ARTICLE V. PERSONAL INCOME TAX
CHAPTER 113. WITHHOLDING OF TAX
§ 113.4. Time and place for filing reconciliation and withholding statements.
(a) An employer shall furnish a wage and tax withholding statement to each of his employees on or before January 31 following the year of payment of compensation, or within 30 days from the date of the last payment of compensation if employment or the business is terminated.
(1) An employer shall use the combined Federal-State Wage and Tip Withholding Statement (Form W-2) issued by the Internal Revenue Service or one that conforms thereto with the word ''Commonwealth'' printed, stamped or typed thereon. The statement must show the name of employer, address and identification number of the employer; the name, address and Social Security number of the employee; the total compensation paid during the taxable year; and the total amount of Pennsylvania tax withheld during the taxable year.
(2) The wage and tax withholding statements required in this chapter shall be in addition to a requirement of the Federal or a local government.
(b) Every employer who withholds tax under this chapter shall file with the Department an annual withholding reconciliation statement, on a form provided by the Department, along with a copy of all employee wage and tax withholding statements, by the following:
(1) A going business for tax withheld in the prior year, annually, by January 31.
(2) A terminated business within 30 days after the end of the month in which business or payment of compensation ceased.
(c) The annual withholding reconciliation statement and accompanying wage and tax withholding statements as required under subsection (b) shall be forwarded to the Department by electronic transmission as specified in instructions of the Department. If an employer is required to furnish nine or less wage and tax withholding statements under subsection (a), the employer may forward the annual withholding reconciliation statement and accompanying wage and tax withholding statements to the Department by first class mail.
(d) For purposes of this section, the term ''electronic transmission'' means the process of sending digital or analog data over a communication medium to one or more computing, network, communication or electronic devices.
[Pa.B. Doc. No. 18-1784. Filed for public inspection November 16, 2018, 9:00 a.m.]
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