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IMPORTANT – By ordinance adopted April 4, 2006, Bloomfield Borough, Perry County levied an Emergency and Municipal Services Tax (EMST) effective January 1, 2006 in the amount of $25.00 per year.

SECTION 1. BACKGROUND

Occupational Privilege Taxes (OPT) became known as the Emergency and Municipal Services Tax (EMST) starting with tax year 2005. Like the old OPT, the EMST is assessed by political subdivisions on individuals with occupations performed within their jurisdiction.

SECTION 2. TYPE AND AMOUNT OF TAX

Bloomfield Borough adopted an EMST tax in the amount of $25.00 per year effective January 1, 2006. Note that special provisions have been instituted in these instructions due to the lateness of the new ordinance being passed and therefore the late mailing of these instructions and associated forms for tax year 2006. For ease of identification such special rules have been highlighted herein as these are.

SECTION 3. DUTY OF EMPLOYERS

(A) AUTHORITY & REQUIREMENT TO WITHHOLD THE EMST - Each employer within Bloomfield Borough, as well as those employers situated outside Bloomfield Borough but who engage in business within Bloomfield Borough, is hereby charged with the duty of collecting from each of his employees engaged by him and performing for him within Bloomfield Borough the EMS tax and making a return and payment thereof to the Tax Collector (Capital Tax Collection Bureau). Further, each employer is hereby authorized to deduct this tax from each employee performing services in Bloomfield Borough whether such employee is paid by salary, wage, or commission. However, the Supreme Court of Pa. found that the occupation of clergy is exempt from the EMST. Therefore, religious organizations should not withhold the EMST from clergy employees.

(B) WHICH EMPLOYEES SHOULD HAVE THE TAX WITHHELD - A person is subject to the EMST at his/her “place of employment,” which means the actual location where the individual works. Therefore, the headquarters of the employer, and/or where the payroll checks are prepared, do not determine what EMST is due unless the employee actually works at those locations.

(C) EMPLOYEES WITH MULTIPLE WORK LOCATIONS – Where, for a single employer, an employee works at multiple work locations located in different taxing jurisdictions, such employee is subject to the EMST levied by the taxing jurisdiction of his “principle” work location. Common sense fact and circumstances should be used to determine the principle work location, such as time spent in each taxing jurisdiction and where the employee’s primary duties are performed. These factors should be grouped by each taxing jurisdiction where work is performed. For example, a mail carrier would be subject to the tax where the majority of his regular route is located – not necessarily the taxing jurisdiction where he picks up his mail in the morning. Likewise a temporary assignment of a short duration in a certain taxing jurisdiction would not subject that employee to that jurisdiction’s EMST if the employee clearly had a principle work location in another jurisdiction. An employee can have only one principle work location at a single time, but an employee can have multiple principle work locations during a calendar year. In a case where an employee changes principle work locations during a calendar year, the EMST must be withheld for each taxing jurisdiction, up to a maximum of $52 in any one calendar year.

(D) AMOUNT AND TIMING OF WITHHOLDINGS FROM SUBJECT EMPLOYEES – The employer is required to withhold Bloomfield Boroughs’ entire $25 EMST from subject employees, with the only exceptions listed herein Section 3., subsections (E), (F) & (H) and Section 4., subsection (C). Failure to do so makes the employer liable for the tax as if it had been levied against the employer. Because of this possibility for employer liability, it is prudent for the employer to withhold the entire amount of the tax levy as soon as possible in each calendar year.

(E) OPTIONAL MINIMUM 10% WITHHOLDING REQUIREMENT - Current EMST enabling legislation only permits taxing jurisdictions to require a “one-time” withholding of the tax. However, acknowledging that employees may be part-time, and/or that they may be hired near the end of a calendar quarter, an optional minimum withholding schedule has been established, that if followed, will relieve an employer of any liabilities for under-withholding the EMST. Where the entire EMST tax liability is not withheld, but an employer withholds EMST equal to at least of 10% of an employee’s gross wages, the employer will be considered as having met the withholding requirements.

(F) EMPLOYEES WITH MULTIPLE EMPLOYERS/OCCUPATIONS – In cases where an employee is subject to more than one EMST in a tax year due to having more than one occupation (employer or self-employment), all EMST taxes should be withheld/paid if the total of all EMST’s does not exceed $52. If the withholding of any subsequent full EMST amount would exceed $52 when added to prior EMST payments, a withholding adjustment of Bloomfield Borough’s EMST may be necessary. Any adjustment is based on 2 factors: 1) the employee must provide proof of deduction/payment of the EMST claimed to have been previously paid (see the last paragraph in this subsection (F) for more information); and 2) which taxing jurisdiction has “priority” to the EMST. Per law, the priority of claim to collect an EMST is based on the following 4 factors with such priority going from highest (1), to lowest (4):

1. The employer where the individual first became employed in the calendar year. For the purposes of this rule, if the individual was employed with each employer on January 1 of the tax year, or initially employed on the same day at both employers, this would be a tie, so it proceeds to factor no. 2.

2. The political subdivision in which a person maintains his principal office or is principally employed. A person’s principle employment would be the one in which he earns the most.

3. The political subdivision in which a person resides & works, if such a tax is levied by that political subdivision.

4. The political subdivision in which a person is employed and which imposes the tax nearest in miles to the person’s home.

Only previously paid EMST having priority over Bloomfield Borough’s levy should be used to reduce Bloomfield Borough EMST. For example, assuming an employee provided an employer with a receipt of $52, showing a same year EMST tax paid previously, if the taxing jurisdiction of the receipt does not have priority over Bloomfield Borough EMST, then Bloomfield Borough’s full $25 EMST should be withheld. To receive a refund of the $20 overpayment, the employee should contact the taxing jurisdiction to which it had the $52 withheld and paid. Where the claim priority of a receipt is undeterminable, it is assumed the receipt has priority claim over any “yet to be paid” EMST levy.

An employee must provide proof of a previously paid EMST for it to be even considered as an offset to withholding of another EMST. Such proof may consist of a receipted tax bill paying the tax directly to the tax collector, a “Certificate of Deduction” showing a tax withheld by another employer, or a pay stub showing an EMST has been withheld providing it shows the tax year and taxing jurisdiction, along with the amount withheld. Where an employer is offsetting an EMST due to proof of a previously paid EMST, the employer should make a copy of such proof and retain it with his payroll records for possible verification by the tax collector.

(G) DATES FOR DETERMINING TAX LIABILITY AND TRANSMITTAL OF WITHHELD EMST - Each employer shall use his employment records for each calendar quarter to determine the number of employees from whom said tax shall be deducted and paid to the Tax Collector per the following schedule:

QUARTER TRANSMITTAL DUE

1ST (January 1 thru March 31) April 30 of the current year

2ND (April 1 thru June 30) July 31 of the current year

3RD (July 1 thru September 30) October 31 of the current year

4TH (October 1 thru December 31) January 31 of the following year

(H) EFFECT OF LOW INCOME & OTHER EXPEMPTIONS TO EMPLOYERS REQUIREMENT TO WITHHOLD THE EMST – Bloomfield Borough’s EMST ordinance provides the following exemptions from the tax. 1) Persons who have combined earned income of less than $6,000.00 for the tax year. 2) Persons who attain the age of seventy (70) years at any time during the tax year. 3) Persons who are clergy members, but only insofar as such person practices the occupation of clergymen or clergywoman, and not insofar as the person engages in another occupation. Since it is impossible for an employer to know what an employee’s final earned income will be prior to the need to deduct and remit this tax, the “low earnings” exemption in 1) above does not alleviate, in any way, the employer’s responsibility to withhold and transmit the tax. Employees who eventually find they fit this category will have to complete an application form for refund after the close of the tax year and provide proof of their total earned income for such period.

If an employee turns 70 years of age or older during 2006, you do not have to withhold the tax from his/her pay providing an application for exemption is completed by the employee and submitted to our Bureau along with proof of their age (e.g., copy of birth certificate, driver’s license). Application for Exemption Forms may be obtained by contacting our office or thru our website at captax.com. Make sure the exemption form for Bloomfield Borough EMST is obtained. Completed exemption application forms and age verification documents should be submitted to our Bureau by the employer with their appropriate quarterly EMST-4 form. Employees in this category should be listed on the ND-1(a) year-end reporting form as Code “5.”

Clergy employees being employed solely for clergy services are also exempt from the withholding of this EMS tax. Such employees should be listed on the ND-1(a) year-end reporting form as Code “4.”

SECTION 4. FORMS, REPORTINGS & RETURNS

Each employer shall prepare and file (where required) the following returns (to be supplied by Capital Tax Collection Bureau).

(A) FORM EMST-2, EVIDENCE OF DEDUCTION (Not contained in this mailing) This form MUST be completed by an employer for ONLY those employees who have more than one occupation during the calendar year and request a "Certificate of Deduction". In all other cases the employer has an OPTION of either completing this form or preparing their own "Certificate of Deduction" for the employee. An employee's pay stub can qualify as the "Certificate of Deduction" if it clearly shows the amount and a description of the deduction. As a minimum, an employer's substitute "Certificate of Deduction" must contain the year and type of the tax, the municipality which is levying the tax, and the amount deducted (e.g., 2006 EMST, Bloomfield Bo. $25.00). An employer must continue to maintain a record of employees that have had the EMST tax withheld. However a reporting of individual employees that have had the EMST tax withheld need not be filed with the Capital Tax Collection Bureau. Where EMST 2 forms are issued, Copy "A" should be retained by the employer for his records, and Copy "B" should be given to the employee for whom the deduction was taken. If you need a supply of EMST 2 forms contact the EMST Department at Capital Tax Collection Bureau.

(B) FORM EMST-4, WITHHOLDING TRANSMITTAL - This return is an employer's summary of tax withheld from his employees for a calendar quarter. Instructions for filing FORM EMST 4 are listed on the reverse side of this form. Some taxing jurisdictions permit the employer to retain a small percentage of the money withheld as a collection fee (if the tax is transmitted when due). If such a collection commission is allowed it will be identified on Line 3 of the Form EMST 4. Partial deductions of the tax are possible either from the “10% Rule” (see Section 3., (E) herein) and/or offsets against the Howe Twp. EMST based on previously paid/deducted EMST (see Section 3., (F) herein). If this is the case, enter the total of the tax withheld in line 2 and write the word “PARTIAL” boldly over the instructions for this line.

(C) FORM ND-1, NON-DEDUCTION - An employee subject to Bloomfield Borough’s EMST who does not have any, or a portion, of the $25.00 tax withheld by his employer must be listed on this report. The 2006 ND-1(a) & (b) forms are included in this mailing. They are on a single sheet of paper with the one side being the ND-1(a) form and the reverse side being the ND-1(b) form. The reverse side of the EMST-5 form contains instructions for the both the ND-1 (a) & (b) forms. The 2006 ND-1 form, if applicable, must be filed along with the 2006 annual employer reconciliation form EMST-5 by March 15, 2007 (Note: for tax year 2006, due to the lateness of the ordinance change and therefore this mailing, employees who left employment prior to May 23, 2006 and did not return to work for you in 2006 after this date, that had only a partial or no deduction made, should be listed on the 2006 ND-1(a) form. For these former employees, enter “5” under Column C and enter the words “LAST EMPLOYED PRIOR TO 5/25/06” in an appropriate row of Column D thru Column E of this form, enter the amount that you did not deduct from these employees for this reason (up to $25) in Column F. Also provide the employee’s last known address in open lines under Columns D thru E that correspond to this former employee. Following this procedure will hold you harmless for any tax not withheld from employees that only worked for you prior to May 25, 2006.

(D) FORM EMST-5 – The 2006 EMST-5 Form (an 8.5 by 11 inch sheet of paper) is included in this mailing. This EMST-5 form reconciles the annual total of EMST paid, adjusted by any ND-1 report totals and any employer commission taken; to the number of same tax year W-2’s submitted to our Bureau for earned income tax (EIT) purposes, multiplied by the appropriate EMST tax rate. This form must be filed by March 15 following the tax year.

SECTION 5. INTEREST AND PENALTIES—OVERDUE TAX

If for any reason this tax is not paid when due, interest at the rate of six per cent (6%) per annum on the amount of said tax shall be due, beginning with the due date of said tax, and a penalty for non-payment thereof, at one half of one percent (.5%) of the amount of the unpaid tax for each month or fraction thereof during which the tax shall remain unpaid. Where suit is brought for the recovery of this tax, the individual liable therefore shall, in addition, be responsible and liable for the costs of collection.

DISCLOSURE STATEMENT: You are entitled to receive a written explanation of your rights with regard to the audit, appeal, enforcement, refund and collection of local taxes by calling Capital Tax Collection Bureau’s Harrisburg Division at (717) 234-3217 during the hours of 8 a.m. – 4 p.m., Monday through Thursday and 8:30 a.m. – 4 p.m., Friday.