Local Services Tax Regulations Sheet 2008 Page 6
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146.
An individual works July thru December in the City. He did not work January thru June,
anywhere. He earns $10,000 a month. Does he owe the $52 LST to the City?
ANSWER:
Yes.
His employer knows that this employee is over the $12,000 low
income exemption level. No exemption certificate has been filed. The $52 may be
prorated for the rest of the year; however the employer should withhold $52 because that
is what the employee owes.
SECOND OPTION: The employer at his option may also deduct a lump sum equal to the
prior periods that were missed. This payroll deduction should also include the current
payroll deduction that he and his co-workers are liable for. For example, if he is paid
once a week, he would add $1 to his lump sum prior liability, and this would be
deducted from one paycheck.
7.
An employee has 2 jobs and both are part time. Both started at the beginning of January.
Job #1 is in the City and pays the employee $1,000 a month. Job #2 is in Municipality “A”
and paid the taxpayer $500. Where should the tax be paid?
ANSWER:
Since both jobs started at the same time, the job that pays the employee
the most should be considered his principal job and in this case it would be the City. The
LST should be paid to the City. The employee should file an exemption certificate with
Municipality “A” or proof that his principal employer is located in the City.
8.
On January 1, an employee worked for an employer in Municipality “A” and paid $10. In
June the employee started a new job in the City and will make over $12,000 at this job.
Is the employer required to withhold the LST from the employee?
ANSWER:
Yes. The employer must still withhold $42 if the employee provides proof
that the $10 was paid to Municipality “A”. Then the employer must pro-rate the $42
based on the remaining payroll periods.
SECOND OPTION: The employer at his option may also deduct a lump sum equal to the
prior periods that were missed. This payroll deduction should also include the current
payroll deduction that he and his co-workers are liable for. For example, if he is paid
once a week, he would add $1 to his lump sum prior liability, and this would be
deducted from one paycheck.
9.
An employee files his exemption certificate late. The employer has already withheld $12.
Can the employee apply for a refund?
ANSWER:
Yes. The employee should request the refund from the employer. It is
permissible and recommended that his employer refund the current year LST and make
an adjustment for their next quarterly remittance to the City for the current year.
If the employer does not refund the LST, the employee can apply for a refund from the
City after the employer’s fourth quarter payment and summary form is filed at the end of
January of the following year (see Section 301(j)).
The City is not required to pay interest until 75 days after the fourth quarter or when the
taxpayer files for a refund, whichever is later.
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