Frequently Asked Questions by Employers

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How is Earned Income Tax collected from employers?

Quarterly and reconciliation forms are mailed to the employer accounts. If available, the employer's federal EIN number acts as the account number. If not, an account number is assigned. Employer quarterly payments are entered using the social security number of each individual employee. This information is posted to the employer's account and to each individual employee account. All new employees are added to the tax rolls immediately. Reconciliation forms are reviewed on an annual basis. Accompanying W-2 data is processed, verified and posted to employer accounts and individual taxpayer (employee) accounts.

What is the Local Services Tax (LST)?

This is a local tax that anyone who holds a job in a jurisdiction that imposes the tax must pay. It is due quarterly on a prorated basis determined by the number of pay periods in a calendar year.

How do employers file?

Complete a tax form and return it before the quarterly due dates. Make sure to correct any errors in district, business name or address. Also attach a list that includes the name and social security number of each employee. Find out more information: Download the Local Services Tax Instruction Form

How do I withhold LST for my employees?

If the total LST rate exceeds $10, the tax must be assessed and collected on a prorated basis determined by the number of payroll periods in your calendar year. To calculate the tax to be assessed on each employee during a payroll period, use this formula:

Total LST rate ÷ number of payroll periods in the calendar year = prorated tax amount

All employers are required to round down to the nearest 1/100th of a dollar. If the total LST rate is $10 or less, you are required to collect the tax in a lump sum.

How do self-employed individuals report LST?

If the LST rate is more than $10, and if you report your business earnings as a profit or loss on a state government schedule, the tax form should be filed quarterly. If the LST rate is $10 or less, you are required to pay the tax in a lump sum during the first quarter.