Payroll Prep Tax Information

When the City of Scranton was declared a financially distressed municipality pursuant to the Municipalities Financial Recovery Act, Act 47 of 1987, as amended, (Act 47) it was authorized to levy a payroll preparation tax in lieu of the City’s business privilege tax and mercantile tax. On December 14, 2021, Scranton City Council adopted ordinance File of the Council No. 95 repealing the City of Scranton’s business privilege tax and mercantile tax and authorizing the levy of a payroll preparation tax to begin on January 1, 2022.

In the interest of assisting City’s businesses as they prepare their initial Payroll Preparation Tax return, on May 24, 2022, Scranton City Council approved Resolution No. 79 which provides a one-time waiver of the interest and penalties that would otherwise be due from June 1, 2022, through June 30, 2022. This, in practical terms, extends the due date from May 31, 2022, to June 30, 2022, of a business’s initial Payroll Preparation Tax return.

Read more about the Payroll Prep Tax on the City’s website.

Payroll Preparation Tax Calculator

The City of Scranton and Scranton School District have taken steps to eliminate the Business Privilege and Mercantile (BPM) taxes for 2022, in favor of a Payroll Preparation Tax (PPT).

While only select businesses are subject to the BPM taxes, the PPT will be applied more broadly to entities doing business in the City of Scranton.

By law, this transition must be revenue neutral – which means neither taxing body can generate more total revenue than what is collected under the BPM from the previous year. For some businesses this will result in a decrease in tax liability, while others will see an increase.

If fully approved, beginning in January 2022, the PPT will be imposed on a percentage of a business’s total payroll—at a rate of 0.002786775 by the City and 0.008064 by the School District. Likewise, all BPM liabilities will be eliminated.

Learn more about the details of this proposed action here.

To estimate your anticipated PPT liability, use the calculator below.*

*Please note, calculator is for estimation purposes only.

Kohanski & Co. Recent Acquisitions

On July 1, 2020 Kohanski & Co. CPA’S completed the acquisition of Kingston, PA based CPA firm Kovalchik, Kollar & Co. Kovalchik, Kollar & Co. has been providing accounting, tax, and auditing services to clients for over 60 years.

“The team at Kohanski & Co. is excited about the opportunity to continue our growth with this acquisition” said Michael Kohanski, CPA. “We currently service a significant number of clients in Luzerne County and the ability to add to that base and have an office located there is another step in our strategic plan.”

“Mr. Kovalchik and Mr. Kollar will assist with the transition prior to retiring and all of the existing staff of Kovalchik, Kollar & Co. will be offered positions with Kohanski & Co.” said Mr. Kohanski.

In addition, Morda, Kotch & Associates, PC has merged into Kohanski & Co. and Colleen H. Morda, CPA joined the firm as manager in charge of the Kingston office. Also, effective January 1, 2021, we relocated the Moosic office to 4 Meadow Avenue, Suite C, Scranton, PA 18505