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1. Is the $12,000 low income exemption for the tax mandatory?

Murrysville is required to exempt persons whose total earned income and net profits from all sources with Murrysville is less than $12,000 for the calendar year in which the LST is levied. "Income from all sources" is defined as the same "earned income" and "net profits" that are used to determine the local earned income tax.

2. How is the Local Services Tax (LST) deducted from the employees and remitted to the tax collector?

Using the following example: if employees work full time in the City of Pittsburgh and all employees earn $12,000 or more, the employer is required to withhold the pro-rata share of the tax by dividing $52 by the number of payroll periods established by the employer for the calendar year. The $52 tax would be collected at $1 per week for taxpayers paid weekly or at $4.33 per month for taxpayers paid monthly. When calculating the pro-rata chare, employers are required to round down to the nearest one-hundredth of a dollar.

The employer should remit the LST quarterly. The LST form is provided by the Municipality of Murrysville. The tax should be paid the month following the end of each quarter.

LST Employer Quarterly Remittance Forms

3. At the beginning of the year, an employee expects to earn a total of $10,000 in the Municipality of Murrysville for the tax year. Should the employer withhold the Local Service Tax (LST)?

No, if an employee files an Exemption Certificate with his employer stating that he will make less than $12,000 for the tax year, the employer is required not to withhold the LST. The employer is required to have the Exemption Certificate available for employees to complete.

LST Exemption Certificate

4. Is an employer responsible for withholding the Local Services Tax (LST) if it was not correctly anticipated that an employee would make $12,000 before year's end?

For example: A new hire files an Exemption Certificate with his employer. The employer or his employee realize with 13 weeks left in the year he will make $12,000 at this job, because he is working more hours than anticipated. He is paid weekly. 

After the employer realizes the employee will make $12,000 or more, the employer should withhold $40 from the next pay to catch-up then $1 a pay for the remaining 12 weeks for a grand total of $52.

5. If an employee has two jobs, one of which is in the Municipality of Murrysville, and earns more than $12,000 per year total, how should the Local Services Tax (LST) be paid?

For example: An employee has 2 jobs. Both started at the beginning of January. Job 1 is in the Municipality of Murrysville and pays the employee $3,000 a month. Job 2 is in Municipality "A" and paid the taxpayer $2,000.

The job that pays the employee the most should be considered his principal job and in this case, it would be the Municipality of Murrysville. The LST should be paid to the Municipality of Murrysville. The employee should file an Exemption Certificate with Municipality "A" as proof that their principal employer is located in the Municipality of Murrysville.

6. If an employee has a job both in and out the Municipality of Murrysville, earns more than $12,000 per year total but less than $12,000 in the Municipality of Murrysville, are they subject to the LST?

No, the taxpayer should file an Exemption Certificate with both employers and have no LST deducted. The taxpayer is not subject to the LST since he did not earn $12,000 in any single municipality. If the tax was withheld, the employee could file a refund claim request with each municipality after January 31 of the following year. The LST Refund Form (PDF) can be obtained at the municipal website.

7. If an individual earns more than $12,000 per year in both the Municipality of Murrysville and another municipality, what is his Local Services Tax liability?

For example: An individual works January through June in the Municipality of Murrysville and July through December in Municipality "A". He earns $10,000 a month at both jobs and is paid once a week. What is his liability of Murrysville?

His employer in the Municipality of Murrysville should withhold $1 a week for 26 pay periods and remit $26 along with his other employees' deductions to the Municipality of Murrysville. Municipality "A" would be entitled to the LST for the second half of the year. The employee should file an exemption certificate and provide proof that the LST was paid to Murrysville for the first half of the year to Municipality "A".

8. Is a self-employed person who has an office in the Municipality of Murrysville or who works out of his home located in the City of Pittsburgh subject to the Local Services Tax (LST)?

Yes. A self-employed person is subject to the $52 LST if they work in the Municipality of Murrysville. The tax may be prorated and paid quarterly.

9. Two separate employers who are located in Pittsburgh withheld the Local Services Tax from the same employee. What should the employee do?

First fill out an Exemption Certificate with the employer that you earn the least with (Secondary Employer). Then you may complete a Local Services Tax Refund Application LST Refund Form (PDF) with acceptable proof of payments.

10. An employee previously worked in a different municipality that also levies a Local Services Tax (LST). Does the employee also pay LST to the Municipality of Murrysville?

For example: On January 1, the employee worked for an employer in Municipality "A" who levies a flat $10 Local Services Tax and paid $10. In June, the employee started a new job in Murrysville earning $5,000 a month. Does the employee have to pay the Local Services Tax to the Municipality of Murrysville?

The rate of the Local Services Tax is $52 for Murrysville. If the employee works the rest of the year in Murrysville, the employer should withhold the remaining $42 after the employee shows proof that $10 was withheld from Municipality "A".

11. What happens if an employee discontinues working and has exceeded $12,000? Must the employer try to collect the tax from the former employee for the remainder of the year?

No, the employee is now liable for the tax. If an employee quits, his previous employer only needs to withhold the tax for the payroll periods in which he was employed.

12. If a non-resident contractor hires personnel from both in and out of state, what are the obligations for the Local Services Tax (LST)?

The employer is required to have upfront exemption certificates available for employees. The employer is required to withhold the LST for employees who don’t file an exemption certificate. It does not matter if an employee is from in or out of Pennsylvania. It only matters if they qualify for an exemption and they file the exemption certificate with the employer.

13. Am I required to pay the Local Services Tax (LST) if I am on active military duty?

No, fill out a local exemption certificate and attach a copy of your orders directing you to active duty status. Annual training is not eligible for exemption.