I reported previously that Governor Rendell signed into law the proposed changes to what was known as the “Emergency and Municipal Services Tax.” Since the passage of the bill, now known as Act 7 of 2007, the PA Department of Community and Economic Development has posted some helpful information interpreting the Act.
Initially, the law changes the name of the tax to the “Local Services Tax.” In addition, however, there are a number of important substantive changes as well. For example, all municipalities that levy the tax in an amount exceeding $10 must provide for an exemption for all persons who make less than $12,000 per year. The law also requires that such payments be withheld from individuals’ paychecks throughout the tax year rather than at one time (as was the case with the old Occupational Privilege Tax).
Some of the mechanics for these changes can be a little complex, so you will want to consult your solicitor to determine how best to implement the requirements of Act 7, but you better hurry – the law requires that any tax adopted pursuant to the Act must be adopted prior to December 31, 2007, or it will not be valid until 2009.