As of January 1, 2018, Pennsylvania now has a withholding obligation for some payors of Pennsylvania-sourced nonemployee compensation or business income to nonresidents as well as lessees of Pennsylvania real estate from nonresidents. Withholding at the Pennsylvania personal income tax rate is required for any payees that received $5,000 or more from a single payor during the year; withholding on any amount below the $5,000 threshold is optional.
Payors and lessees that are required to withhold will be required to: apply for a 1099-MISC withholding account by electronically completing and submitting a PA-100 Pennsylvania Enterprise Registration Form; electronically file quarterly withholding returns and annual reconciliations via e-TIDES; and electronically remit any withholdings via e-TIDES. It is important to note that payors and lessees are liable for withheld taxes as well as taxes not adequately withheld.
In prior year tax years, the Pennsylvania Department of Revenue did not require the submission of Federal Form 1099-MISC to the state unless the 1099 reported state withholdings. However, starting with the tax year 2018 which has a 1099 filing deadline of January 31, 2019, Federal Forms 1099-MISC will be required to be filed with the Department by any payor that pays Pennsylvania-source income to a resident or nonresident, regardless of whether the amount is subject to withholdings.