SALT Blog - SALT Blawg

Philadelphia applies the “requirement of employment” test in order to determine whether a non-resident’s base of operations is the employer’s Philadelphia location. If a Philadelphia employer requires a non-resident employee to perform duties outside of Philadelphia (including working from home), that employee is exempt from the Wage Tax for those days spent fulfilling that requirement.  However, if a non-resident works from home for his or her own convenience, that employee is not exempt from the Wage Tax, even if the Philadelphia employer authorizes the work from home arrangement. 

COVID-19 created a situation where a number of employees were required to work from home due to the pandemic. Those non-resident employees are eligible for a refund on the wages that were withheld during the period that their employer required them to work from home, outside of Philadelphia.  Philadelphia recently issued guidance on obtaining Wage Tax refunds related to tax year 2020. 

Ordinarily, only employees were permitted to apply for a Wage Tax refund.  However, because of the large number of people who were required to work from home due to the health crisis, for tax year 2020 only, the Department of Revenue is permitting employers to submit a refund request on behalf of a group of their non-resident employees in an effort to streamline the process.  The new form can be accessed here.  Employers will be able to upload the form through Philadelphia’s eFile portal beginning in February.

For those employees whose employer does not submit a bulk application on behalf of its employees, those individuals may submit a refund petition via an online Wage Tax refund petition that will be available beginning in February. The online petition form is the preferred method.  Alternatively, employees may submit a paper refund petition.  Employees who are submitting requests for Wage Tax refund related to travel, stock options, and/or business expenses are required to use the paper form.  The Department’s guidance is available here.

If you have any questions about Philadelphia’s Wage Tax refund process, please contact us.  Jennifer Karpchuk can be reached at jennifer.karpchuk@chamberlainlaw.com.