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____ TAX YEAR LOCAL SERVICES TAX (LST)
EMPLOYER REPORTING INSTRUCTIONS FOR TAXING JURISDICTIONS
ADMINISTERED BY THE CAPITAL TAX COLLECTION BUREAU (CTCB)
CTCB WEBSITE – WWW.CAPTAX.COM 11/09/17 version CTCB E-MAIL – CAPTAX@CAPTAX.COM
These instructions are for every LST taxing jurisdiction collected by the CTCB for the ____ Tax year.
SECTION 1. BACKGROUND
For ____ and later tax years, wherever you see the words or acronyms of “Emergency and Municipal Services Tax (EMST)” or
“Occupational Privilege Tax (OPT)” used, they are synonymous with “Local Services Tax (LST)”.
SECTION 2. AMOUNT OF TAX
The ____ “LST TAX RATE TABLE” shows the annual LST levies for every taxing jurisdiction that is administered by CTCB.
Also, the taxing jurisdictions for which you were mailed this packet, and their ____ tax year rate is found on the combined LST-2 and
LST-4 Form enclosed. You will want to make additional copies of this form to use when reporting subsequent quarters for this tax year.
SECTION 3. DUTY OF EMPLOYERS TO WITHHOLD THE LST
(A) AUTHORITY & REQUIREMENT TO WITHHOLD THE LST - Each employer within a listed taxing jurisdiction, as well as
those employers situated outside a listed taxing jurisdiction but who engage in business within a listed taxing jurisdiction, is charged with
the duty of collecting the LST from each of his employees and making a return and payment thereof to CTCB. Further, each employer is
authorized to deduct this tax from each employee performing services in a listed taxing jurisdiction whether salary, wage, or commission
pays such employee.
(B) WITHHOLDING -- HOW MUCH & WHEN - For tax year ____, where the LST is levied at a combined rate exceeding $10,
withholding of the LST shall be made on a pro-rated payroll period basis for each payroll period during the calendar year in which an
employee is engaging in an occupation unless the employee is engaging in concurrent employment, or another exemption applies.
DEFINITION OF “PAYROLL PERIOD” FOR LST PURPOSES: For many employers, the “LST payroll period” may be different
than the actual payroll period associated with a pay date. For LST purposes, the “payroll period” associated with any pay date is the
payroll period within which the pay date resides. Please note that a payroll period in ____ if the corresponding paycheck was issued to
the employee in ____ (even for work performed in ____). For example, if an employee was paid on January 2, ____ for the work
performed between December 16, ____ and December 30, ____, the January 2, ____ paycheck counts as a ____ paycheck for
purposes of LST. Simply stated, the date the employee is paid determines the LST payroll period.
The pro-rated share of the tax assessed on a employee for a payroll period shall be determined by dividing the appropriate
combined rate of the LST levied for the calendar year by the number of “LST payroll periods” (which is equal to the number of pay dates)
established by the employer for the entire calendar year. The employer shall round down the calculated amount of the Tax collected
each payroll period (pay date) to the nearest one-hundredth of a dollar. For example, where an employer pays the employees on a bi-
weekly basis, they will have 26 payroll periods for ____. When an employer pays the employees on a weekly basis, they will have 52
payroll periods in ____.
If an employer is in a taxing jurisdiction where the LST is $52 and the employee earns over $12,000 per year, the
employer should withhold $1.00 per check if they pay employees on a weekly basis and $2.00 per check if they pay employees
on a bi-weekly basis.
Where an LST is levied at a combined rate of $10 or less the withholding of the entire tax amount should be withheld
from the employee’s first pay, if sufficient in amount.
(C) EMPLOYEE’S PLACE OF EMPLOYMENT - A person is subject to the LST at his/her “place of employment,” which means
the actual location where the individual works. Therefore, the headquarters of the employer and/or where the payroll checks are
prepared do not determine what LST is due unless the employee actually works at those locations.
(D) EMPLOYEES WITH MULTIPLE WORK LOCATIONS – Where, for a single employer, an employee works at multiple work
locations located in different taxing jurisdictions, such employee is subject to the LST levied by the taxing jurisdiction of his “principle”
work location. This means that an employee that only works for one employer may still be subject to LSTs for multiple taxing
jurisdictions up to a maximum of $52 for any given tax year. Facts and circumstances should be used to determine the principle work
location, such as time spent in each taxing jurisdiction and where the employee’s primary duties are performed. For example, a mail
carrier would be subject to the tax where the majority of his regular route is located – not necessarily the taxing jurisdiction where he
picks up his mail in the morning. For a combined tax levy of more than $10, the first day of each payroll period would determine the
taxing jurisdiction(s) that can levy the LST. For a combined LST levy equal to or less than $10, the principal work location could change
on a daily basis. An employee can have only one principle work location at a single time, but an employee can have multiple principle
work locations during a calendar year.
(E) AMOUNT AND TIMING OF WITHHOLDINGS FROM SUBJECT EMPLOYEES – The employer is required to withhold, from
subject employees, a listed taxing jurisdiction’s LST in accordance with Section 3 with the only exceptions as provided in Section 4.
Failure to do so makes the employer liable for the tax as if it had been levied against the employer.
SECTION 4. EXCEPTIONS TO WITHHOLDING RULES
NOTE REGARDING SUBSECTIONS (A) & (B) BELOW: The exemptions as provided for in the following subsections (A) & (B) are
applied for by an employee completing an “LST-Exempt Form” and submitting it to the employer with any required documentation. With
every Quarterly Return submitted indicating exempt employees the employer must forward a copy (fax/mail) of the completed exemption
form (no attachments & only the first page of the form, unless for exemption # 1, in which case a complete copy of the LST-Exempt form
needs to be submitted) to the CTCB and retain the originals of all exemption forms & attachments for a minimum of 3 years. Employers
who have not withheld all or a portion of the LST from an employee pursuant to an LST-Exempt Form, AND who do not have copies of
the employee’s LST-Exempt Form and its supporting documents, will be held responsible for the payment of the LST as if the tax had
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