Sign Pennsylvania Terms of Use Agreement Safe

Document type sign terms of use agreement pennsylvania safe

hi I'm Frank Ryan the state representative from the hundred first District in Pennsylvania in the wee hours of the morning late in 2017 the Pennsylvania legislature approved and the governor signed a new law which as part of the tax code required the withholding of Pennsylvania withholding tax on 1099 miscellaneous income for those individuals working in the Commonwealth who live out of state now if you're not familiar with that tax code now wouldn't expect most people to be what it basically means is if you reside in another state and work in Pennsylvania you have to pay pennsylvania withholding tax unless you're an employee but little known to most people is that very innocuous change to some was a catastrophic change in the law as to others and the reason is is that we have reciprocity agreements with some other states we explain what a reciprocity agreement is let's say you happen to live in Pennsylvania but work in Maryland your Pennsylvania employment status is the such that by you being a resident of Pennsylvania your maryland employer will withhold from your taxes pennsylvania withholding taxes even though you work in maryland so as a result you would pay the taxes to pennsylvania that's called the reciprocity agreement we have this with a number of other states maryland Ohio West Virginia Virginia Delaware and New Jersey when we implemented this 1099 miscellaneous type income approach it means if you are living in Maryland in this particular case I'm going to reverse the scenarios you're living in Maryland but now you're doing work in Pennsylvania what will happen is that Pennsylvania company will have to withhold Pennsylvania withholding taxes from that Maryland resident well here's what's going to happen as a result of that most states have viewed miscellaneous income because of the advent of independent contractors as the same as paying wages we've inadvertently opened up a door to where those states will reach against us and have them do that to our state residents so if you are a Pennsylvania resident as an independent contractor doing work in Maryland then you will then find yourself having Maryland withholding tax the net result of all of this is that it will create a phenomenal amount of paperwork with little to no tax benefit you see what the intent of the law was was that we would want to find some way of taxing those individuals who are working from non States non type of reciprocity States with us that we were then withhold Pennsylvania withholding taxes and they felt the estimate would be about thirty million dollars I contend that instead what they've done is they've opened up a floodgate and here's the floodgate there's a number of things wrong with it first of all just because you give someone that type of a 1099 miscellaneous doesn't mean that they earn the income in that state so let me give you a real-life example for south central Pennsylvania say if you are a independent contractor doing work for Hershey corporation Hershey Pennsylvania will issue you your 1099 miscellaneous but that work wouldn't may or may not have been done in Pennsylvania now there is a provision in the law to allow someone to exclude that non Pennsylvania sourced income but that is an unbelievable administrative burden so my bill House bill 2027 is designed to repeal this and what we intend to do by repealing it is say let's go back and look at the reciprocity agreements that we have with other states let's capture that income but let's do it in an orderly rational perspective rather than in some midnite approach where it hasn't been through a committee hasn't been properly vetted and hasn't gotten input from professionals and an interesting case the other day a CPA sent me an email and he was sent me a scathing email and he said he said Frank I can't believe you would sponsor a bill this idiotic and he used those words he said it was irresponsible and he said I just want to tell you that it was so horrible it would have a Mendeley negative effect and he's cc'd an awful lot of people in email and I send my response they said dear sir thank you for the email but you misread my bill my bill repeals the very thing you're arguing against you misread it in the very first line of my bill says I'm repealing this provision so he came back and he sent me another email and he said I'm embarrassed I hadn't really read it yet and now that I've read it I see you are doing exactly what I need to do and I want to get behind you and getting this bill approved House bill 2027 ladies and gentlemen if we intend to have any type of orderly economic relationships with the rest of the nation and the rest of the world we have to think through clearly the impact of bills that we passed we need to make sure they're properly vetted so I'm going to ask you to take a look at House bill 2027 and let's get behind this program of repealing this short-sighted version of attempting to get more tax revenue you know a better approach for us to do will be looking at ways of cutting costs rather than increasing the regulatory and administrative burden on small employers large employers and every taxpayer in the Commonwealth thank you so much for your time I'm Frank Ryan I look forward to hearing from you you