Earned Income Tax Collection System Reform Signed Into Law Governor Ed Rendell signed into law legislation reforming Pennsylvania's earned income tax collection system for local governments and school districts. The purpose of this legislation is to make changes to the local income tax collection system by further providing for the recapture of tax, for register for earned income and occupational privilege taxes, for the collection of taxes, for audits of earned income taxes, providing for the consolidated collection and uniform distribution of local income taxes, for penalties and for costs of delinquent tax collection, making editorial changes, and making repeals. The legislation establishes various reforms in relation to the collection of earned income tax (EIT) that would consolidate, modernize and introduce uniformity to the collection process. This legislation consolidates local income tax collection systems on a county-wide basis, thereby reducing the number of collectors from 560 to 66 (one for each county) with regard to the collection of taxes on behalf of nearly 2,900 municipalities and school districts. The term "local income tax" is utilized so that these provisions will apply to EIT collection systems and any local personal income tax collection systems that might be established in the future. Employers will be required to withhold the entire local tax owed by each employee, and to remit those taxes to the tax collector for the tax collection district where the employer's facility is located. The "entire tax owed by an employee" includes the tax levied by the school district and municipality where an employee lives and the non-resident tax levied by the municipality where an employee works. Uniform withholding will capture virtually all taxes imposed on employees in Pennsylvania, reducing the need to collectors to find and bill taxpayers quarterly or at the end of the year. Uniform withholding will achieve the goal of a zero-local-income tax balance for employees at the end of the year and improve cash-flow for local governments during the year.