A recent change in Pennsylvania statutes will affect certain of the College’s out-of-state consultants and vendors.
Pennsylvania recently enacted legislation -Act 43- which requires Pennsylvania state tax withholding on business income payments to Non-PA residents.
Effective July 1, 2018, Lafayette College is required to withhold an amount equal to Pennsylvania state taxes, currently 3.07%, and to remit to the PA Department of Revenue for all out-of-state individuals and entities. This tax withholding will be reported on the 1099-MISC tax form.
The College issues Form 1099 to vendors and sub-contractors to whom it has paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments. Vendors and sub-contractors are persons or companies, which are not employees and have paid for services, including individuals, partnerships, Limited Liability Companies (LLC), Limited Partnership (LP), and Estates. Vendors or subcontractors operating as S or C-Corporations and sellers of merchandise, freight, storage or related items are excluded.
The withholding requirement applies to any individual with a non-Pennsylvania address who performs services in Pennsylvania, and any LLC with a non-resident single-member that has not made an election to be taxed as a corporation. Additional information on the tax law, is available at the Pennsylvania Department Revenue website at www.revenue.pa.gov.