SECTION 101. DEFINITIONS
For the purpose of these regulations, the following terms shall have the meanings ascribed to them in this section,
except when the context clearly indicates or requires a different meaning:
A. "The Ordinance" means the Approving Subdivision Earned Income Tax Ordinance or Resolution.
B. "Association" means a partnership, limited partnership or any other unincorporated group of two or
more persons.
C. "Business" means an enterprise, activity, profession, or undertaking of any nature conducted for profit,
or ordinarily conducted for profit, whether by an individual, partnership, association, or any other entity.
D. "Corporation" means 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.
E. "Earned" means [t]The time when income is earned is when service is rendered. The time when net profits
are earned is the same as that of income.
F. "Employer" means an individual, partnership, association, corporation, governmental body or unit or
agency, or any other entity employing one or more persons on a salary, wage, commission, or other compensation
basis.
G. "Nonresident" means an individual, partnership, association, or other entity domiciled outside the
Approving Subdivision.
H. "Current year" means tThe calendar year for which the tax is levied.
I. "Domicile" means [t]The place where one lives and has his permanent home and 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 cases of businesses, or associations, the domicile is that place considered as the
center of business affairs and the place where its functions are discharged.
J. "Earned Income" means the [s]Salaries, wages, commissions, bonuses, incentive payments, fees, tips
and other compensation received by a person or his personal representative for services rendered, whether directly
or through an agent, and whether in cash or in property; not including, however, wages or compensation paid to
persons on active military service, periodic payments for sickness and disability or retirement or payments arising
under workmen's compensation acts, occupational disease acts and similar legislation, or payments commonly recognized
as old age benefits, retirement pay or pensions paid to persons retired from service after reaching a specific
age or after a stated period of employment or payments commonly known as public assistance, or unemployment compensation
payments made by any governmental agency or payments to reimburse expenses or payments made by employers or labor
unions for wage and salary supplemental programs, including, but not limited to, programs covering hospitalization,
sickness, disability or death, supplemental unemployment benefits, strike benefits, social security and retirement.
K. "Income Tax Officer" means the Director, Earned Income Tax Division, Capital Area Tax Collection Bureau.
L. "Net Profits" means [t]The net income from the operation of a business, profession, or other activity,
except corporations, after provision for all costs and expenses incurred in the conduct thereof, determined either
on a cash or accrual basis in accordance with the accounting system used in such business, profession, or other
activity, but without deduction of taxes based on income.
M. "Preceding year" means [t]The calendar year before the current year.
N. "Succeeding year" means [t]The calendar year following the current year.
O. "Person" means a natural person.
P. "Resident" means an individual, partnership, association, or other entity domiciled in the Approving
Subdivision.
Q. "Taxpayer" means a person, when an individual, a member of a co-partnership, association, or any other
entity, required by the Ordinance to (1) file a return on earnings or net profits or both, or (2) pay a tax thereon.
R. "Employee" means any person who renders services to another for a financial consideration or its equivalent,
under an express or implied contract, and who is under the control and direction of the latter, and shall include
temporary, provisional, casual, or part-time employment.
S. Hereinafter, when the word "Approving Subdivision" is used, it is to be construed as meaning a political
subdivision approving these regulations.
T. "Political Subdivision" means the duly constituted authorities of Cities of the 2nd Class, Cities
of the 2nd Class A, Cities of the 3rd Class, boroughs, towns, townships, townships of the 1st Class, School Districts
of the 2nd Class, School Districts of the 3rd Class and School Districts of the 4th Class, as prescribed by laws
of the Commonwealth of Pennsylvania.
SECTION 102. EXCLUSIONS FROM EARNINGS
The following payments or benefits received by an individual shall not be subject to the tax:
A. "Old-Age Benefits, Retirement Pay and Pensions." Periodical payments, commonly recognized as old-age,
retirement or pension payments, made to persons retired from service after reaching a specific age or after a stated
period of employment.
B. "Sick or Disability Benefits." Periodical payments received by an individual under a sickness or disability
insurance plan are not taxable. Where, however, an employee receives regular salary from his employer during a
period of sickness or disability, by virtue of his contract of employment, such compensation shall be fully taxed.
C. "Benefits Arising Under Workmen's Compensation Acts, Occupational Disease Acts, and Similar Legislation."
Compensation received by employees under the provisions of workmen's compensation acts, occupational disease acts,
or similar legislation together with any amount received as damages by suit or agreement on account of any injury
or disease, is not taxable.
D. "Public Assistance of or Unemployment Compensation Payments." Payments made under any public assistance
or unemployment compensation legislation are not taxable.
E. "Active Military Service Pay." Compensation paid by the United States to any person for active service
in the armed forces of the United States is not taxable.
F. "Bonuses Paid by United States, Pennsylvania, or Any Other State, for Active Military Service." Any
Bonus or additional compensation paid to a person by the United States, by the Commonwealth of Pennsylvania, or
by any other State, for active service in the armed forces of the United States, is not taxable.
G. "Death Benefits." Where an employer makes death benefit payments to the beneficiary of an employee
or to his estate, whether payable in a lump sum or otherwise, such payments are not taxable.
H. "Proceeds of Life Insurance Policies." Proceeds of life insurance policies payable by reason of the
death of an insured to his estate or to a beneficiary are not taxable.
I. "Gifts and Bequests." Cash or property received as a gift or under a will or under statutes of descent
and distribution is not taxable.
J. "Interest Received." All forms of interest, e.g., on obligation of the United States or its possessions,
the Commonwealth of Pennsylvania, or any political subdivision thereof, or on bank or postal savings accounts,
mortgages, or loans, received by an individual, are not taxable. However, where a person is engaged in the business
of lending money at interest, e.g., loan or finance companies or private bankers, the net profits of such business
are taxable.
K. "Board and Lodging to Employees for Convenience of Employer." The value of meals and lodging furnished
to domestics or other employees by the employer for the latter's convenience is not considered earned income and
is not taxable.
L. "Income from Stocks, Trusts and Rentals of Dwellings Owned by Individuals not Licensed (or conducting a
business) as Realtors by the Commonwealth of Pennsylvania." The income from these items is not taxable under
present law in the State of Pennsylvania.
M. "Capital Gains and Losses." Capital gains and losses shall not be included in computing taxable net
earnings. These include such capital gains and losses as arise from the sale, exchange, or other disposition of
depreciable business property, and real property, used in the taxpayer's trade or business.