Are you a tenant who pays rent to a non-resident individual, estate or trust? If so, beware! Act 43 of 2017 created a withholding obligation for certain lessees of Pennsylvania real estate to non-residents and also expanded the requirements with respect to when a copy of Federal Form 1099-MISC is required to be filed with the Pennsylvania Department of Revenue. Anyone leasing real estate in Pennsylvania, who makes a lease payment in the course of their trade or business to a non-resident lessor, and who is an individual, estate, or trust, is required to withhold from such payments an amount equal to the tax rate specified at 72 P.S. § 7302 (currently, 3.07%). Withholding is optional for lessees paying a non-resident lessor less than $5,000 annually. Lessees withholding tax are required to file a Federal Form 1099-MISC with both the lessor and the PA Department of Revenue showing the amount paid to them and the amount of the withholding.
If you should have any questions, please feel free to call Rob Gundlach or Kim Freimuth to discuss at (215) 918-3636 (rgundlach@foxrothschild.com) or (215) 918-3627 (kfreimuth@foxrothschild.com).