Article II: IMPOSITION AND RATE OF TAX
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Section 2.01 Tax on Earnings and Net Profits of Residents and/or Non-Residents.
A. By virtue of the Resolutions and/or Ordinances adopted by the various taxing jurisdictions, a tax for general revenue purposes of any fraction of one percent (1%) has been imposed on the following:
1. The earned income, as defined herein, of residents and non-residents, where applicable, of the various taxing jurisdictions during the calendar year.
2. The net profits, as defined herein, of residents and/or non-residents of the various taxing districts during the calendar year.
B. The tax levied under (A)(1) above shall relate to and be imposed upon salaries, wages, commissions, and other compensation paid by an employer, or on his behalf, to a person who is employed by him.
The tax levied under (A)(2) above shall relate to and be imposed on the net profits of any business, profession or other activity carried on by a person or owner or proprietors, either individually or in association with some other person or persons.
C. The entire taxable earnings of resident employees and the total net profits of residents from businesses, professions and other activities are subject to this tax. The above item referring to residents would also apply to a taxing jurisdiction which levied these taxes on the non-residents as well as residents. Neither the source of the earnings or net profits, nor the place or places where the services were rendered exempt a resident from the tax.
Section 2.02 Exemption of Corporations.
Every corporation, including sub-chapter S corporations, shall be exempt from this tax.
COMMENT: "Pass-through" income received by a shareholder of an S corporation is not subject to local earned income tax under Scott v. Hempfield Area School District, 643 A.2d 1140, 164 Pa. Cmwlth. 588,1994. Only wages, salaries or other compensation paid by the S corporation to a shareholder for services rendered by the shareholder may be taxed.
Section 2.03 Exemption of Non-Profit Organizations.
A. The net profits of any institution or organization operated for public, religious, educational, or charitable purposes, organization of institutions not organized or private profit, and trusts or foundations established for any of these purposes shall be exempt from the tax on net profits.
B. This section shall not be construed to exempt any person who is an employer from the duty of withholding the tax at source from his employees and paying the amount withheld to the Income Tax Officer.
COMMENT:See, the definition of "Net Profits" in 53 P.S. § 6913(I) and 53 P.S. § 6913(III)(A)(1) pertaining to the imposition of a net profits tax.
Section 2.04 Registration of Taxpayers.
Every resident of a taxing jurisdiction who received, or anticipates that he will receive, taxable earned income in the form of earnings or net profits during the calendar year must register his name and residence address, his social security number, and the name and address of his place of employment or business with the Earned Income Tax Administrator. All residents will thereafter be responsible for reporting changes in their name, place of residence, or place of employment or business to the Earned Income Tax Administrator. In the districts which levy the non-resident factor, the above would also apply to these persons.
COMMENT: This section merely requires a taxpayer to register himself as such with the tax collector for administration purposes. Where a taxpayer believes that he will not receive taxable earned income for any given year, he must apply to and receive from the local taxing body a written exoneration from registering and filing subsequent returns.