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PA Withholding Requirement Doesn’t Apply to Carriers

02 Feb 2018 9:35 AM | Anonymous member (Administrator)

As a part of its 2017 budget package, Pennsylvania enacted a new requirement that those making payments to nonresident independent contractors must withhold a part of the payment to cover potential liability of the contractors for Pennsylvania state income tax.  

HOWEVER, this requirement does NOT apply to payments by motor carriers to owner-operators.  Federal law, 49 US Code 14503, says a state can’t require a carrier to withhold income tax on an interstate employee - or require such an employee to pay an income tax - except the state of the employee’s residence.  And the statute’s definition of “employee” includes independent contractors.  

The Pennsylvania Motor Truck Association says the state’s revenue department is aware of the federal restriction and will not be enforcing the requirement on motor carriers with respect to owner-operators that don’t live in Pennsylvania.

Source: The State Laws Newsletter

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