Pennsylvania Act 43 of 2017 created a withholding obligation for certain payors of PA-source income and lessees of PA real estate to non-residents. Beginning January 1, 2018, anyone that makes payments to non-resident individuals or disregarded entities with a non-resident member that is subject to 1099-MISC reporting is required to withhold PA tax from the payments if the payments total $5,000 or more annually. If the payor or lessee fails to withhold and pay the required withholding, the Department of Revenue can collect the tax from the payor or lessee. Just recently, the state announced that periods prior to July 1, 2018 will not be subject to assessment for a failure to withhold; however, when tax is withheld, it must be filed and remitted as required by law.
Contact us if you have any questions related to the new PA 1099-MISC withholding rules or other tax matters.