As of April 29, 2023, The Emergency Municipal Services tax has been lowered to $52 per year and is imposed on all employees working within the City to support usage of City services such as fire and police. $47 of this tax is retained by the City, while $5 is given to the school district. Each employer is responsible for collecting this tax and making the return to the Central Tax Bureau.
Employers are required to withhold the tax on a pro-rated basis based on the number of pay periods per calendar year. A person subject to the LST shall pay a pro rata share of the tax each payroll period. The pro rata share of the tax to be paid each payroll period shall be determined by dividing $52, the rate of the LST, by the number of payroll periods established by the employer for the calendar year. For example, if an employer has 26 pay periods in a year, $2.00 ($52/26 periods) shall be deducted from each and every pay.
As the City has lowered Local Service Tax in 2023, a total of $86 shall be collected for the 2023 year.
January 1 – April 28 ($3 per week X 17 weeks) = $ 51
April 29 – December 31 ($1 per week x 35 weeks) = $35
Employers are required to remit the Local Services Taxes withheld from their employees and file a Local Services Tax Quarterly Return thirty (30) days after the end of each quarter of a calendar year. The Local Services Tax Quarterly Return to be filed for each physical location in the area shall list the name, address, social security number, number of payroll periods for which the Local Services Tax was withheld and the amount of Local Services Tax being remitted for each employee. In addition, the quarterly report shall list all employees that are deemed to be exempt.
The Local Services Tax shall be no more than $52 on each person for each calendar year (2024 and beyond), irrespective of the number of political subdivisions within which a person may be employed.
Any person whose total earned income and net profits from all sources within the political subdivision is less than $12,000 for the calendar year is exempt.
An annual exemption certificate must be completed by the employee and submitted to their employer and to the Tax Office. A copy of this exemption certificate can be obtained at the following link: http://www.hab-inc.com/forms/forms-for-employers/. Upon receipt of the exemption certificate, the employer shall not withhold the tax from the person during the calendar year for which the exemption certificate applies.
With respect to a person who claimed an exemption from the Local Services Tax, upon notification to an employer by the person that the person has received earned income and net profits from all sources equal to or in excess of $12,000 in that calendar year or upon an employer’s payment to the person of earned income in an amount equal to or in excess of $12,000 in that calendar year, an employer shall withhold the Local Services Tax from the person as following:
The employer shall withhold from the person, for the first payroll period after receipt of the notification under the above paragraph, a lump sum equal to the amount of the tax that was not withheld from the person due to the exemption certificate filed by the person, plus the per payroll amount due for that first payroll period.
In the event the employment of a person subject to withholding of the Local Services Tax under this exception is severed in that calendar year, the person shall be liable for any outstanding balance of tax due and the political subdivision levying the tax may pursue collection under this act.
Employers shall be responsible for retaining a copy of all exemption certificates filed by employees within a given calendar year for a minimum of three (3) years. Employers who have failed to withhold the Local Services Tax from an employee or employees, and do not have copies of the employee exemption certificate or certificates, will be held responsible for the payment of the Local Services Tax as if the tax had been originally levied against the employer.
Any person who is an honorably discharged veteran with 100% service-connected disability and any person, who is on active duty, is also exempt from this tax.