Part 1
Earned Income and Net Profits Tax
§24-101 Definitions.
The following words and phrases, when used in this Part, shall have the meanings ascribed to them in this Section, except where the context clearly indicates or requires a different meaning:
Association–a partnership or limited partnership or any other unincorporated group of two or more persons.
Borough–Borough of Selinsgrove.
Business–an enterprise, activity or 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.
Corporation–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.
Current year–the calendar year for which the tax is levied.
Domicile–the place where one lives and has his permanent home 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 place in which a man has voluntarily fixed the habitation of himself and his family, 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.
Earned income–compensation as determined under §303 of the Act of March 4, 1971, P.L. 6, No. 2, known as the “Tax Reform Code of 1971,” and regulations in 61 Pa.Code, Part. I, Subpart. B, Article V (relating to personal income tax), not including, however, wages or compensation paid to individuals on active military service. Employee business expenses are allowable deductions as determined under Article III of the Tax Reform Code of 1971. The amount of any housing allowance provided to a member of the clergy shall not be taxable as earned income. [Ord. 825]
Employer–an individual, fiduciary, association, corporation, governmental body or unit or agency, or any other entity employing one or more persons for a salary, wage, commission or other compensation.
Income Tax Officer or Officer–person, public employee or private agency designated by the Borough Council to collect and administer the tax on earned income and net profits.
Net profits–the net income from the operation of a business, profession, or other activity, except corporations, determined under §303 of the Act of March 4, 1971, P.L. 6, No. 2, known as the “Tax Reform Code of 1971,” and regulations in 61 Pa.Code, Part I, Subpart B, Article V (relating to personal income tax). The term does not include income which is not paid for services provided and which is in the nature of earnings from an investment. For taxpayers engaged in the business, profession or activity of farming, the term shall not include:
(1) Any interest earnings generated from any monetary accounts or investment instruments of the farming business.
(2) Any gain on the sale of farm machinery.
(3) Any gain on the sale of livestock held 12 months or more for draft, breeding or dairy purposes.
(4) Any gain on the sale of other capital assets of the farm.
[Ord. 825]
Nonresident–a person, partnership, association or other entity domiciled outside the taxing district.
Person–an individual, fiduciary, association, corporation or other entity. Whenever used in any section prescribing and imposing a penalty, the term “person,” as applied to associations, shall mean the partners or members thereof and as applied to corporations, the officers thereof.
Person or individual–a natural person.
Preceding year–the calendar year before the current year.
Resident–a person, partnership, association or other entity domiciled in the taxing district.
Salaries, wages, commissions and other compensation–salaries, wages, commissions, bonuses, incentive payments, fees and tips that may be paid to or received by an individual for services rendered or that may accrue to such individual in accordance with an established accounting procedure, whether directly or through an agent and whether in cash or in property, not including periodic payments for sick or disability benefits and those commonly recognized as old-age benefits, retirement pay, pensions paid to persons retired from service after reaching a specific age or after a stated period of employment, public assistance or unemployment compensation payments made by any governmental agency.
Succeeding year–the calendar year following the current year.
Taxable period–the period beginning the effective date of this Part and ending the 31st day of December of the calendar year.
Taxpayer–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.
(Ord. 343, 11/7/1966, §126-1; as amended by Ord. 825, 10/3/2016, §5(B))
§24-102 Imposition of Tax.
1. A tax for general revenue purposes shall be levied on earned income received and on net profits earned in the period beginning January 1, 1967, and ending December 31, 1967, or for taxpayer fiscal years beginning in the current year; and the tax shall continue in force on a calendar year or fiscal year basis, without annual reenactment, unless the rate of the tax is subsequently changed. Changes in rate shall become effective on the date specified in the ordinance. The rate of tax shall be the maximum allowed by law.
2. In particular this tax shall be on:
A. Salaries, wages, commissions and other compensation earned by residents of the Borough of Selinsgrove.
B. Salaries, wages, commissions and other compensation earned by nonresidents of the Borough of Selinsgrove in the Borough of Selinsgrove.
C. Net profits earned by residents of the Borough of Selinsgrove during the taxable period.
D. Net profits earned by nonresidents of the Borough of Selinsgrove in the Borough of Selinsgrove during the taxable period.
(Ord. 343, 11/7/1966, §126-2)
§24-103 Declaration and Payment of Tax.
1. Every taxpayer who during the taxable period can reasonably be expected to earn net profits or earnings not subject to the provisions of §24-104 relating to collection at source, shall make and file with the Income Tax Administrator, on a form prescribed by the Income Tax Administrator, a declaration setting forth the amount of net profits anticipated by him for such taxable period and subject to tax, the amount of estimated tax imposed thereon by this Part and such other relevant information as the Income Tax Administrator may require.
2. The declaration of estimated tax shall be filed and the tax shall be paid at the following times:
A. If said net profits or earnings can reasonably be expected on or before the 15th day of January of the taxable period the taxpayer shall file a declaration on or before said date and shall pay the estimated tax shown thereon in equal quarterly installments on or before the said 15th day of January and on or before the 15th day of the following April, July and October.
B. If said net profits or earnings cannot reasonably be expected on or before January 15 of the taxable period, but can be reasonably expected subsequent to said date, the taxpayer shall file his declaration on or before the first of said remaining quarterly installment dates on which the taxpayer can first reasonably be expected to earn such net profits or earnings and shall pay the estimated tax shown thereon in equal installments on or before said remaining quarterly installment dates.
C. If the taxpayer elects to file a declaration on a calendar year basis setting forth his estimated net profits or earnings for the current calendar year, then, in lieu of filing his declaration and making payments therefore at the times set forth in paragraphs .A and .B immediately hereinabove, he may, on or before the 15th day of January of the taxable period, pay the quarterly installment of the estimated tax according to the declaration filed and, on or before the 15th day of April of the taxable period, file a declaration of the estimated tax for the portion of the taxable period included in the new calendar year, and pay said tax in equal installments on or before said 15th day of April and the 15th day of July.
D. If the taxpayer elects to file a declaration on a fiscal year basis different from the taxable period, setting forth his estimated net profits or earnings for a period included in the taxable period, then in lieu of filing his declaration and making payments thereon at the times set forth in paragraphs .A and .B immediately hereinabove, he may pay the quarterly installments of the estimated tax according to the declaration filed from the portion of the taxable period included in said fiscal year and, on or before the 105th day after the close of the fiscal year, file a declaration of the estimated tax for the portion of the taxable period included in the said succeeding fiscal year and pay said tax in equal quarterly installments, beginning with the due date of the filing and ending with the first quarterly installment due after the close of the taxable period.
3. Where the taxpayer who has filed a declaration required hereinabove shall thereafter reasonably be expected to earn, during the taxable period, additional net profits or earnings not subject to collection at source or finds that he has overestimated his net profits or earnings, he may file an amended declaration with the Income Tax Administrator, setting forth such relevant information as the Income Tax Administrator may require.
4. Every taxpayer who is required to file a declaration of estimated tax under the provision of this Section shall make and file with the Income Tax Administrator, on a form prescribed by the Income Tax Administrator, a final return showing all net profits and earnings during the taxable period, the total amount of tax due thereon, the amount of the estimated tax paid under the provisions of this Section, the amount of the tax that has been withheld pursuant to the provisions of §24-104 and the balance of the tax due.
5. The final return shall be filed at the following times:
A. If the taxpayer’s declaration is filed on a calendar year basis, he shall file his final return on or before the 15th day of April after the close of such calendar year.
B. If the taxpayer’s declaration is filed on a fiscal year basis the same as the taxable period, he shall file his final return on or before the 15th day of the month after the close of the taxable period.
C. If the taxpayer’s declaration is not filed on a calendar year basis or on a fiscal year basis the same as the taxable period, he shall file his final return on or before the 105th day after the close of the fiscal year.
6. The percentage of the total net profits of any calendar or fiscal year of a taxpayer beginning or ending within the taxable year to which the tax imposed by this Part shall be applicable shall be equal to the same percentage of such total net profits as the number of days in any such year within such period bears to the total number of days in any such year.
7. 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.
8. In the event of the death of a taxpayer during the taxable period, his personal representative or, in the absence of a personal representative, his heirs as designated by the Pennsylvania Probate, Estates and Fiduciaries Code, Chapter 21, “Intestate Succession,” 20 Pa.C.S.A. §2101 et seq., as amended, or as hereafter amended or supplemented, shall file his final return within 60 days after the taxpayer’s death and pay the tax due or demand refund in the case of overpayment. [Ord. 825]
9. In the event the taxpayer’s taxable net earned income consists solely of salary, wage, commission or other compensation, the tax on which has been withheld by his employer and returned to the Income Tax Administrator, such taxpayer shall be relieved of the necessity of filing a return.
10. The final return shall include net profits and earnings taxable under any other ordinance of the said Borough of Selinsgrove for the same calendar or fiscal year so that but one inclusive return shall be filed by every taxpayer for any 1 calendar or fiscal year.
(Ord. 343, 11/7/1966, §126-3; as amended by Ord. 825, 10/3/2016, §5(B))
§24-104 Collection at Source.
1. Every employer within the Borough of Selinsgrove who employs one or more on a salary, wage, commission or other compensation basis shall deduct, at the time of the payment thereof, the tax imposed by this Part on the earnings due to his employee or employees and, within 30 days after each quarter of a year, shall make and file a return with the Income Tax Administrator on a form prescribed by the Income Tax Administrator, setting forth the taxes so deducted and such other relevant information as the Income Tax Administrator may require, and shall pay to the Borough of Selinsgrove the amount of taxes so deducted.
2. On or before the 15th day of February of the taxable period, every such employer shall make and file with the Income Tax Administrator on a form prescribed by the Income Tax Administrator:
A. A return showing the total amount of the earnings of his employee or employees during the portion of the preceding calendar year ending December 31 and embraced within the taxable period, the total amount of tax deducted and the total amount of tax paid to the Borough of Selinsgrove.
B. A return for each employee showing the total amount of the employee’s earnings during the portion of the preceding calendar year ending December 31 and embraced within the taxable period; the amount of tax deducted therefrom; the employee’s social security number, name and address; and such other relevant information as the Income Tax Administrator may require. Such employer, on or before February 15 of each of said years, shall furnish a copy of such return to the employee named in the return.
C. The said returns shall include the earnings taxable under any other ordinance of the Borough of Selinsgrove for the same calendar year so that one return shall be filed by an employer for any 1 calendar year.
3. Every employer who discontinues business prior to the close of the taxable year shall, within 30 days after the discontinuance of business, file the returns hereinabove required and pay the tax due. Where discontinuance of business is due to the death of the employer, his personal representative or, in the absence of a personal representative, his heirs, as designated by the Pennsylvania Probate, Estates and Fiduciaries Code, Chapter 21, “Intestate Succession,” 20 Pa.C.S.A. §2101 et seq., as amended, or as hereafter amended or supplemented, shall within 60 days after the death of the employer file his return and pay the tax due or demand refund in the case of overpayment. [Ord. 825]
4. The failure or omission of any employer to make the deductions required by this Section shall not relieve any employee from the payment of the tax or from complying with the requirements of this Part relating to the filing of declarations and returns.
5. If an employer makes a deduction of tax as required by this Section, the amount deducted shall constitute in the hands of such employer a trust fund held for the account of the Borough of Selinsgrove as beneficial owner thereof, and the employee from whose earnings such tax was deducted shall be deemed to have paid such tax.
6. The withholding of earnings and the payment and return thereof by the employer under the provisions of this Section shall not be required in respect to earnings of domestic servants, farm labor and casual labor not in the course of the employer’s business. This subsection shall not be construed to exempt such employees from the requirements of filing a declaration and a return of such earnings and the payment of tax thereon under the provisions of §24-103.
(Ord. 343, 11/7/1966, §126-4; as amended by Ord. 825, 10/3/2016, §5(B))
§24-105 Powers and Duties of Income Tax Administrator.
1. It shall be the duty of the Income Tax Administrator to collect and receive the taxes, fines and penalties imposed by this Part. It shall also be his duty to keep a record showing the amount received by him from each person paying the tax and, if paid by such person in respect of another person, the name of such other person and the date of such receipt.
2. The Income Tax Administrator is hereby charged with the administration and enforcement of the provisions of this Part and is hereby empowered, subject to approval by the Selinsgrove Borough Council, to prescribe, adopt, promulgate and enforce rules and regulations relating to any matter pertaining to the administration and enforcement of this Part, including provisions for the reexamination and correction of declarations and returns and of payments alleged or found to be incorrect or as to which an overpayment is claimed or found to have occurred, and to prescribe forms necessary for the administration of this Part.
3. The Income Tax Administrator and agents designated in writing by him are hereby authorized to examine the books, papers and records of any person 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 person is hereby directed and required to give to the Income Tax Administrator or to any agent so designated by him the means, facilities and opportunity for such examinations and investigations as are hereby authorized.
4. Any information gained by the Income Tax Administrator or his agents or by any other official, agent or employee of the Borough of Selinsgrove as a result of any declarations, returns, investigations, hearings or verifications required or authorized by this Part shall be confidential and shall not be disclosed to any person except for official use in connection with the administration or enforcement of this Part or as otherwise provided by law.
(Ord. 343, 11/7/1966, §126-5)
§24-106 Suit for Collection of Tax.
1. The Income Tax Administrator may sue in the name of the Borough of Selinsgrove for the recovery of taxes due and unpaid under this Part.
2. Any suit brought to recover the tax imposed by this Part shall begin within 6 years after such tax is due or within 6 years after a 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:
A. Where no declaration or return was filed by any person although a declaration or return was required to be filed by him under the provisions of this Part.
B. Where a false or fraudulent declaration or return was filed with the intent to evade tax.
C. Where any person has deducted taxes under the provision of this Part and has failed to pay the amounts so deducted to the Borough of Selinsgrove.
(Ord. 343, 11/7/1966, §126-6)
§24-107 Interest and Penalties.
If for any reason the tax is not paid when due, interest at the rate of 6 percent per annum of the amount of said tax and an additional penalty of ½ percent 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 therefore shall, in addition, be liable for the costs of collection and the interest and penalties herein imposed.
(Ord. 343, 11/7/1966, §126-7)
§24-108 Payment and Refunds.
The Income Tax Administrator is hereby authorized to accept payment of the amount of tax claimed by the Borough of Selinsgrove in any case where any person disputes the validity or amount of the Borough of Selinsgrove’s claim for the tax. If it is thereafter judicially determined by a court of competent jurisdiction that there has been an overpayment to the Income Tax Officer, the amount of the overpayment shall be refunded to the person who paid.
(Ord. 343, 11/7/1966, §126-8)
§24-109 Applicability.
1. The tax imposed by this Part shall not apply to:
A. Any person as to whom it is beyond the legal power of the Borough of Selinsgrove to impose the tax herein provided for under the Constitution of the United States and the Constitution and laws of the Commonwealth of Pennsylvania.
B. Any institution or organization operated for public, religious, educational or charitable purposes; any institution or organization not organized or operated for private profit; or a trust or a foundation established for any of the said purposes.
C. The net profits of any corporation which is subject to the Pennsylvania Corporate Net Income Tax or exempt from the Pennsylvania Corporate Net Income Tax and any foreign corporation which is subject to the Pennsylvania Franchise Tax or exempt from the Pennsylvania Franchise Tax.
2. This Section shall not be construed to exempt any person who is an employer from the duty of collecting the tax at source from his employees and paying the amount collected to the Borough of Selinsgrove under the provisions of §24-104.
(Ord. 343, 11/7/1966, §126-9)
§24-110 Violations and Penalties.
1. Any person who fails, neglects or refuses to make any declaration or return required by this Part; any employer who fails, neglects or refuses to pay the tax deducted from his employees; any person who refuses to permit the Income Tax Administrator or any agent properly designated by him to examine his books, records and papers; and any person who makes any incomplete, false or fraudulent return to avoid the payment of the whole or any part of the tax imposed by this Part shall, upon being found liable therefor in a civil enforcement proceeding commenced by the Borough, shall pay a judgment of not more than $600 plus all court costs and reasonable attorney fees. No judgment shall commence or be imposed, levied or payable until the date of the determination of a violation by a magisterial district judge. If the defendant neither pays nor timely appeals the judgment, the Borough may enforce the judgment pursuant to the applicable rules of civil procedure. Each day that a violation continues or each Section of this Part which shall be found to have been violated shall constitute a separate violation. [Ord. 825]
2. Any person who, except as permitted by the provisions of §24-105.4, divulges any information which is confidential under the provisions of said subsection shall, upon being found liable therefor in a civil enforcement proceeding commenced by the Borough, shall pay a judgment of not more than $600 plus all court costs and reasonable attorney fees. No judgment shall commence or be imposed, levied or payable until the date of the determination of a violation by a magisterial district judge. If the defendant neither pays nor timely appeals the judgment, the Borough may enforce the judgment pursuant to the applicable rules of civil procedure. Each day that a violation continues or each Section of this Part which shall be found to have been violated shall constitute a separate violation. [Ord. 825]
3. The penalties imposed under this Section shall be in addition to any other penalty imposed by any other section of this Part.
4. The failure of any person to receive or procure the forms required for making any declaration or return required by this Part shall not excuse him from making such declaration or return.
(Ord. 343, 11/7/1966, §126-10; as amended by Ord. 825, 10/3/2016, §5(B))