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Payroll corrections PA Pennsylvania

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  • Payroll corrections PA Pennsylvania

    Does anyone know what the wage and hour law / wage payment law is in PA with regards to payroll corrections?

    Basic facts, employer forgets to deduct local tax and now wants to deduct from employees paycheck. Can they? Does anyone have a citation?

    Last edited by LaborLawNJ; 12-21-2006, 02:09 PM.

  • #2
    The basic premise for PA local taxes is that the employer is required to withhold based on the laws for the township the worksite is located in. There are two exceptions. The city of Philadelphia and Pittsburgh requires that residences pay the city wage tax. This is irrespective of the location of the jobsite.

    What township is the jobsite located? Are you a resident of either Philadelphia or Pittsburgh?


    • #3
      And I take it this was for calendar year 2006? With PA local taxes being a percentage of wages, my recollection when I filed the returns was that the employer had to pay the calculated percentage, whether or not the amount was deducted from the employee. If taxes should have been withheld, and they made a mistake, they do have the right to correct it. However, if this were MY payroll department, I would try to recover the amounts as miscellaneous after-tax deduction over a period of time (not all at once) and show the required amounts as being withheld on the employee's W-2 form.

      In other words, like a "loan". The employer "fronts" the deposits and shows the amounts on your W-2 so you can file your local tax return without any monies (or very little) due; and you repay the employer for this "fix".

      Of course, if this were my payroll department, I would also have periodic audits to determine that all employees were set up to withhold the proper taxes. (grin)
      Last edited by Pattymd; 12-22-2006, 03:59 AM.
      I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


      • #4
        Thanks Patty: Those were my exact thoughts. The thought is to try and work it out and treat it as a loan, as you suggested.

        Rob: this in a philly wage tax issue. Employer claim it paid ee's portion of wage tax but forgot to withold from their pay. Er now wants the $ back. This is for 2006.

        While the expectation is that the ER will work it out, if some ee's are reluctant to authorize the deduction can the ER just take it out? My thought is that they can as long as the dedcution doesn't drop the ee below minimum wage for a given week.



        • #5
          If you have borrowed money from a third party, you can give the employer written permission to deduct payments from your earnings. If your employer has loaned you funds, s/he can deduct the amount from your earnings as long as you have given written authorization. Of course, normal tax deductions must be made. The thing to remember regarding deductions from your paycheck is that you must give written authorization to your employer to make such non-tax related deductions. It is not valid to sign a "blanket" authorization at the time of hire to cover any future deductions. Further, as a rule, deductions cannot reduce your gross pay below minimum wage, and the deductions must be to the benefit of the employee.
          Emphasis mine. The iffy part here is, that although taxes don't require written authorization (obviously), a loan does. A loan for taxes? I'd go for the safe alternative.
          I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


          • #6
            Other townships there is a bit more flexibility. With the city wage tax, there is none. The taxes must be paid regardless and they should have been withheld from your pay check. Pattymd's option exists only if the employer wishes to offer it. No law requires them to do so. I realize this may be a heavy burden. On a lighter note, Philadelphia city wage tax rate is set to decrease next year. Sorry I don't have brighter news!