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FAQ - Business & Wage Tax  

General | Register New Business | Wage Tax | PGH-40 Refunds
FAQ | Local Services Tax | Business Privilege Tax FAQ | Taxpayer Bill of Rights


GENERAL INFORMATION

WHAT ARE THE HOURS OF OPERATION FOR THE SELF-ASSESSED TAX OFFICE?
The office is open 7:30 a.m. through 4:00 p.m., Monday through Friday, excluding holidays.

WHERE IS THE OFFICE LOCATED?
The office is located on the 2nd Floor, City-County Building – 414 Grant Street. The mailing address is:

CITY OF PITTSBURGH
DEPARTMENT OF FINANCE
414 GRANT STREET
PITTSBURGH PA 15219

WHAT IS THE PHONE NUMBER?
  • For general City tax questions call TAXPAYER SERVICES at 412-255-8822
  • For tax forms call our FORMS LINE at 412-255-2524
  • For PARKING TAX questions call 412-255-8603
  • For AMUSEMENT TAX questions call 412-255-2547
  • For questions regarding REGISTERING A NEW BUSINESS call 412-255-2543

It is the taxpayer’s responsibility to pay taxes when due. Failure to receive a form is never an excuse for a late payment.

City and School District of Pittsburgh taxes that are not paid when due require the additional payment of penalty and interest. The City and School District do not recognize Federal tax extensions. No extensions are ever granted.

Taxes that are not paid when due accrue penalty and interest. One day’s delinquency past the due date means a whole month’s penalty and interest.

If the due date of a tax return falls on a holiday or a weekend it MUST be postmarked by the Post Office on the due date or earlier to be considered on time and not late.

When the Treasurer receives only a partial payment and penalty and interest are due, the payment is applied to TAX liability until paid off and then payments are applied to the accrued interest and penalty. A bill will be sent for the balance of tax plus additional penalty and interest.

At the time one begins doing business in Pittsburgh, the business must be registered with the City Treasurer.

Several of the taxes require the filing of a tax return by the taxpayer even when there is no tax due. This is true for the Local Service Tax and Payroll Expense Tax.

In accordance with the Local Taxpayers Bill of Rights, Act 50 of 1998, a taxpayer shall file a written request for a refund or a credit on the prescribed form within 3 years of the due date of the tax return, or 1 year after actual payment of the tax, whichever is later.

Tax rates are subject to change at any time.

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REGISTERING A NEW BUSINESS

Any business, trade or profession carrying on an activity within the City needs to register with the Treasurer’s Office. You can do this by downloading a New Business Registration form, come in to the office, or call 412-255-2543 to have a form mailed to you.

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WAGE TAX INFORMATION FOR
CITY & SCHOOL DISTRICT OF PITTSBURGH

Jordan Tax Service, Inc. (JTS) was selected by the Allegheny County
Central Tax Collection Committee (ACCTCC) to collect the EARNED
INCOME TAX
for the Allegheny County Central Tax Collection District (ACCTCD). The ACCTCD includes the City of Pittsburgh, School District of Pittsburgh and Mount Oliver Borough. These changes are the result of PA Act 32 of 2008, which will take effect in 2012.

An employer must register with JTS if it:

  • Has a location in the ACCTCD where it employs one or more
    persons.
  • Currently withholds 2011 EIT to the City of Pittsburgh or
    School District of Pittsburgh.

Please see the Tax Bulletin for additional information concerning registration with Jordan Tax Service, Inc.

Starting January 1, 2012, JTS will be collecting Quarterly Wage Tax (WT-1), Monthly Wage Tax (WTD), Net Profit (NP-5), Individual Wage Tax (WT-4), Year End Reconciliation (WTE-3) and the Individual Earned Income Tax (PGH-40). This includes all current and prior 2012 taxes as well as 2011 final returns, 2011 4th quarter returns due in 2012 and any delinquent 2011 taxes for taxes listed above.

For more information visit www.jordantax.com/Act32 or call 412-345-
7966.

The City of Pittsburgh will still collect current and prior tax for the Payroll Expense Tax (ET-1), Local Services Tax (LS-1 & LS-3), Amusement Tax (AT), Parking Tax (PT), Institution Privilege Tax (ISP), Facility Usage Fee (UF) and all prior Business Privilege (BP), Mercantile Tax (MT), and Mercantile License (ML). The City of Pittsburgh will also still collect 2010 and prior Earned Income/Net Profit (PGH-40), and Wage Tax (WT-1 and WTE-3).

For more information call 412-255-8822.

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PGH-40 REFUNDS - 2010 & PRIOR

RETURNS THAT CLAIM AN OVERPAYMENT MUST HAVE THE FOLLOWING INFORMATION COMPLETED:

  • Residency status classification completed.
  • All supporting schedules included.
  • Non-residents or part-year residents of the City of Pittsburgh who are residents of Pennsylvania, must have the NON-RESIDENT EXEMPTION CERTIFICATE, FORM WTEX, signed by the local tax collector (see back of return).
  • Part-year residents of Pittsburgh who came from or went to another State must include a copy of both State Income Tax returns.
  • Non-residents of Pennsylvania must include a copy of their VISA or out of State Income Tax return. If your State does not have an income tax, include appropriate proof of residency. If you were a part-year resident of Pennsylvania you also need to include a copy of your State Income Tax return.
  • All information on the tax return should be completed. You must enter your SSN(s).
  • The tax return must be signed. If filing a joint return, BOTH must sign. The appropriate REFUND OR CREDIT area must be checked on LINE 12.
  • ALLOW 8 WEEKS before calling the Refund Tracking System to check on your current year PGH-40 refund at 412-393-0167.
  • If filed in April allow 10 weeks. You will need the Social Security number and the amount of refund requested on the PGH-40 return.

FAILURE TO COMPLETE THE ABOVE INFORMATION WILL PREVENT PROCESSING OF A REFUND. An overpayment of $2.00 or less will not be paid or credited.

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SOME FAQ EXAMPLES - PGH-40 2010 & PRIOR

Question: Is the personal use of my employer’s automobile taxable?
(We follow the State of PA in determining taxable wages)
Answer: The fair market value of the use of the employer’s car is not taxable compensation.

Question: Are deductions for a cafeteria plan taken before calculating employer withholding tax?
(We follow the State of PA in determining taxable wages)
Answer: Generally, if an employee has deductions from his wages for a cafeteria plan and those deductions are for “health and welfare benefits”, you can reduce the gross wages before calculating the withholding. Examples of allowable deductions would be premiums for health insurance, eye plans, and dental plans. Deductions that are not allowable include retirement contributions and dependent care expenses.

Question: Are contributions to a 401(k) Plan excluded from employer withholding?
(We follow the State of PA in determining taxable wages)
Answer: 401(k) contributions are treated the same, whether made inside or outside a cafeteria plan. Elective payments are considered part of the employee’s taxable compensation and are subject to withholding requirements.

Question: Is third party sick pay taxable?
(We follow the State of PA in determining taxable wages)
Answer: Third Party Sick Pay is not taxable.
You should not include this as part of the employees’ wages.

Question: Based on Act 166 for the year 2003, can I get a refund prior to 2003?
Answer: No, employee business expenses were more limited in prior years. These expenses were seen to be expense items on the profit and loss statement of your employer. Overnight travel, meals and lodging were considered expenses of the employer. If your employer didn’t reimburse you for an assignment you could deduct these expenses. Full Time Outside Salesmen were considered quasi self employed and therefore all of their business expenses were considered to generate revenue.

Question: Should an employer withhold tax on group term insurance policies purchased for employees?
(We follow the State of PA in determining taxable wages)
Answer: These payments are NOT compensation. PA and Pittsburgh do not have a threshold ($50,000, for IRS purposes) above which life insurance premiums become taxable.

Question: Should healthcare benefits received by shareholders in a PA-S Corporation be added to their federal Wages?
(We follow the State of PA in determining taxable wages)
Answer: If the “owner” is the owner of a sole proprietor or a partnership, any benefits that the owner receives from the business are not deductible or must be considered to be a distribution because an owner cannot be an “employee”.
Then, based on the law, if the “owner” is a shareholder in an S Corporation, a shareholder can be treated as a “regular” employee so the benefits aren’t taxable. However, if the
“owner” is considered a “highly compensated employee” with an enhanced benefit package, the enhanced benefits are taxable.

Question: Are employee stock options taxable?
(We follow the State of PA in determining taxable wages)
Answer: Employee stock options are considered to be received when the option is exercised, exchanged, sold, or otherwise disposed. The difference between the fair market value of the stock on the date of exercise and the amount paid by the employee to obtain the option, if any, is the amount subject to tax.

Question: What is PINP on the “Notice of Delinquent Tax Statement”?
Answer: PINP equals underpayment of estimated tax. The law provides a penalty for underpayment of estimated tax. Since 1965, City ordinances (now Pittsburgh Code Chapters 245.03 & 246.03) and School District Legislation have provided that an amount
equal to seventy-five percent (75%) of the eventual liability must be paid in quarterly installments with the last installment due in January.

The only exception to the 75% rule is when an amount equal to the entire liability for the previous year is paid in quarterly installments by January. When such payments have not been made, the laws stipulate that penalty and interest shall be assessed. This assessment of penalty and interest is calculated on the amount equal to the difference between what should have been paid and what was actually paid.

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LOCAL SERVICES TAX
(Formerly the Emergency & Municipal Services Tax) & (Formerly the Occupation Tax)

A tax on individuals for the privilege of engaging in an occupation. The Local Services Tax is levied, assessed, and collected by the political sub-division of the taxpayer’s primary place of employment. Rate of tax is $52. The employer is required to withhold the pro-rata share of the tax by dividing $52 by the number of payroll periods established by the employer. See the Exemption Certificate for exclusions.

EMERGENCY AND MUNICIPAL SERVICES TAX
(1-1-2008 replaced by the Local Services Tax, see above)

WHO IS TAXED?
Every individual employed or self-employed working within the City of Pittsburgh. Employers are required to withhold this tax from the earnings of their employees, but the employees are not relieved of liability until the tax is paid. If not paid via withholding, the employee must pay the tax directly to the City Treasurer.

COMMON CREDITS
Pennsylvania law limits total payment by one person to a maximum of $52.00 per year, regardless of the number of employers in a year.

Additional information: 412-255-8821

BUSINESS PRIVILEGE TAX - FAQ

WHO IS TAXED?
Any business, trade or profession carrying on an activity within the City of Pittsburgh. This does not apply to retail or wholesale vending of goods, wares or merchandise, employment for W-2 wages, or activities of a non-profit organization.

WHAT IS TAXED?
Gross income attributable to a business office.

COMMON EXCLUSIONS – receipts attributable to a bona fide out of City office; that portion of receipts attributable to interstate commerce; taxes collected as agent for a governmental body; any aspect of a business which is specifically exempted or excluded by law.

ON THE BUSINESS PRIVILEGE TAX RETURN, SECTION B, WHAT IS THE $20,000.00 EXCLUSION AND WHO GETS IT?
Per City Ordinance #6 of 1996 – Exemption on Gross Annual Receipts, individuals, married couples jointly in business, partnerships and corporations are entitled to ONE exemption from gross receipts. If you file more than one Business Privilege Tax return, you may take the exemption against ONLY ONE of those returns.

  • Subtract the $20,000.00 from gross revenue to obtain the taxable revenue.
  • You must file a Business Privilege Tax return in order to benefit from the exemption.

WHAT IS THE TAX RATE FOR 2007 THRU 2010?
1 Mill (.001) – the Business Privilege Tax will be phased out by 2010.
2 Mills (.002) – the Business Privilege Tax for 2005 and 2006.

IF YOUR ONLY PERMANENT BONA FIDE OFFICE IS LOCATED IN PITTSBURGH WHAT IS TAXABLE?
All gross receipts for work performed within the State of Pennsylvania should be included in your taxable gross receipts.

DOES AN ON-SITE TRAILER AT A CONSTRUCTION SITE LOCATED OUTSIDE OF PITTSBURGH ALLOW YOU TO EXCLUDE THOSE GROSS RECEIPTS IF YOUR PERMANENT OFFICE IS LOCATED IN PITTSBURGH?
No. Based on the Northwood Construction Company Inc. vs. Upper Moreland Township Supreme Court Case, and other recent court cases, listed below, a temporary on-site trailer used by a contractor is not considered a permanent place of business. You should include the temporary on-site trailers within Pennsylvania in your taxable gross receipts.

IF A CLIENT IS LOCATED IN ANOTHER STATE WHAT IS TAXABLE?
All gross receipts for work performed within the State of Pennsylvania would be taxable. Sub-contract labor performed in another state must be included in the taxable gross receipts. Interstate Commerce is allocated; you do not exclude all the gross receipts.

  • Professional fees derived from services billed on an hourly basis may be apportioned by excluding receipts attributable to charges to the client for services you actually performed out-of-state.

TAXPAYERS BILL OF RIGHTS click here

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Department of Finance
200 City-County Building
414 Grant Street

Pittsburgh, PA 15219-2476
Phone: 412-
255-2582
Fax: 412-255-8649