Local Services Tax

CHANGES TO EMERGENCY AND MUNICIPAL SERVICES TAXES UNDER ACT 7

Effective January 1, 2008

 

Tax Rate:  Occupational Privilege Tax (OPT) remains at $10 per calendar year.

Tax Rate:  Local Services Tax (LST) previously known as Emergency and Municipal Services Tax (EMST) remains at $42 per calendar year.

The following is an outline of the changes:

  1. Effective January 1, 2008, the name of the tax will change to the Local Services Tax.

  2. The tax, for tax year 2008 forward, becomes a weekly payroll deduction. 

  3. The District is required to withhold the tax from all employees unless they meet the following criteria stated in 4, 5, and/or 6 below.

  4. The Act requires that all taxing bodies that impose the tax at a rate exceeding $10, to grant a $12,000 income exemption.  Also mandates that a low income exemption certificate be used.  The certificate is to be designed by DCED and allows for employee to state that he/she will make less than $12,000 in earned income in that calendar year.  Employer, upon receipt of completed affidavit, is relieved from withholding the tax from employee until such time the employee claiming the income exemption may exceed the $12,000 threshold.  Employee is required to attach copy of prior years final pay stub or copy of prior year W2 to affidavit form when it is submitted to the employer.  The employee must file his income exemption certificate with both the taxing body and the employer.  LST Exemption Certificate

  5. The Act requires that taxing bodies also exempt all individuals who are on active military duty or have been called to active military duty at any time within the taxing year from payment of the tax.  Also to be exempted is any former/current member of the military who is a paraplegic, double or quadruple amputee, or who has service related disability as declared by the United States Veterans Administration or its successor.

  6. Employers shall refrain from withholding the tax from any employee who provides proof that they are already having the tax withheld by another employer.  The employer must be their place of primary employment.

  7. The employee will only be required to pay the tax for the period on which they are employed within the jurisdiction.

  8. Employees requesting a refund must do so using the LST Refund Application.

  9. Local Services Tax FAQs