Falls Twp. Holding Information Session On New Earned Income Tax

Residents of Falls Township will have the opportunity to ask questions about the recently-enacted earned income tax (EIT) and have them answered at an information session next Tuesday.

The meeting, which will take place at 7 p.m. at the Falls Township Municipal Complex on Lincoln Highway, will be hosted for in-person attendance, live via Zoom, and it will also be televised and posted to the township’s website.

However, due to the meeting being scheduled on the same day and time as a meeting discussing a possible school merger between Pennsbury and Morrisville school districts, Falls Township has plans to hold a subsequent meeting if necessary, according to a statement from the municipality.

Supervisor Chairman Jeff Dence expressed disappointment in the notification about the EIT recently sent to residents by Keystone Collections Group, the county-appointed agency for EIT collection for Bucks County municipalities.

“It wreaks of a scam letter,” Dence said.

Falls Township is making efforts to keep the community informed about the new tax, with a dedicated email address, eit@fallstwp.com, set up for residents to send EIT-specific questions, according to a statement from officials.

Falls Township expects to bring in $7.2 million in new revenue from the EIT in 2023. A consultant for the township previously stated that only 32 percent, or $2.3 million, of the $5.7 million to $5.9 million derived from EIT on Falls Township residents would constitute new taxes.

For the majority of working residents, they are already paying an EIT to other municipalities. Now, that money, aside to those who pay a similar tax in Philadelphia, will be brought back to Falls Township.

See below for information regarding Falls Township’s EIT from the municipality:

Effective January 1, 2023, Falls Township has enacted a 1% Earned Income Tax (EIT) to be collected by Keystone Collections Group for the Township. Keystone Collections Group was appointed by Bucks County to collect the EIT for Falls Township. Keystone can answer questions about EIT collection, remittance, and tax return filing, and you can reach them by telephone at 724-978-0300 or go to their website at Keystone Collections Group (keystonecollects.com).  Their FAQ pages should be able to answer most of your questions.

As its name implies, the Earned Income Tax (EIT) is imposed on earned income, such as wages, salaries, and net profits, but not on unearned income such as interest, dividends, capital gains, alimony, and Social Security.  Also, any individual earning a total income of less than $8,000 annually is exempt from the EIT.

The EIT is imposed on both Township residents and on non-residents who work within the Township limits.  The residential portion of the EIT takes precedence over the non-residential portion so that an individual who is subject to both pays their residential portion first and only pays non-residential EIT if that amount is greater than the residential amount.  The major exception to this rule is Philadelphia’s Wage Tax which overrides the EIT (per the Sterling Act) so that any earned income subject to Philadelphia Wage Tax is not subject to EIT.

Excepting certain circumstances, the Local Tax Enabling Act limits the EIT to a combined total rate of 1%. Therefore, for wages not subject to the Philadelphia Wage Tax, the following scenarios would apply:

1. Falls Resident (regardless of site of work) – Pays 1% EIT for Falls Township
2. Non-Resident (work site in Falls Township) – 
3. If NR pays 1% EIT for home municipality, pays 0% for Falls Township

OR,

2. If NR pays 0.5% EIT for home municipality, pays 0.5% for Falls Township

OR,

3. If NR pays 0% EIT for home municipality, pays 1% for Falls Township

Pennsylvania employers are required to withhold applicable EIT from non-residents and residents and then remit all withholdings to the Keystone Collections Group. Out-of-state employers may choose to withhold and remit the EIT for PA resident employees, but if they choose not to, they should notify the PA resident employee so that the employee can make quarterly estimated payments on their own to Keystone Collections Group.

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