PA Withholding for Nonresidents effective January 1, 2018

Previously, we alerted you to the enactment of PA House Bill 542 that requires businesses to withhold income taxes on certain payments to non-residents.

Beginning January 1, 2018, any business paying more than $5,000 to non-resident lessors (individuals, estates or trusts) for rents or royalties, and more than $5,000 of non-employee compensation or business income to non-resident individuals or non-resident single member limited liability companies, must withhold income tax at the current individual tax rate of 3.07%.

Under guidance recently issued by the PA Department of Revenue, anyone that make such payments must:

  • Apply for a 1099-MISC withholding account by completing a PA-100 electronically, and
  • File quarterly withholding returns and annual reconciliations with the Department and remit the withheld funds via e-TIDES.

We very much appreciate the opportunity to serve you. Please contact Wouch, Maloney & Co., LLP at 215-675-8364 with any questions or for assistance with any tax, financial or accounting issues.