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(a) For purposes of assessment and collection of deducted tax and withheld tax that is not paid over to the Department, all taxes deducted and withheld from employees under this article or under color of this article shall constitute a trust fund for the Commonwealth and shall be enforceable against the employer, his representative, any person knowingly receiving a disbursement of any part of the fund, any person receiving a disbursement of any part of the fund without giving fair and valuable consideration therefore or any other person who is required to collect, account for and pay over the tax. The taxes will not be enforceable against a person receiving a disbursement from an employer if, before the negligent failure to truthfully account for and pay it over to the Commonwealth is discovered, the money is expended in payment of a genuine, uncontested and enforceable obligation, judgment, claim, lien or other liability of the person existing at the time the money was obtained or otherwise superior to the rights of the Commonwealth.
(b) Tax deducted from the State wages of an employee shall be considered to have been withheld at the time of payment of the State wages against which the deduction was charged.
(c) If an employer fails or refuses to pay over any withheld tax or to deposit it in a separate account in trust for and payable to the Department or otherwise identify and segregate it from other funds, it shall be deemed that:
(1) Withheld tax would be on deposit in the general operating account of the employer at the time of payment of the State wages from which deduction was made.
(2) The employer would disburse withheld tax last.
(3) Once withheld tax is disbursed, subsequent deposits would not replenish it.
(4) The lowest intermediate balance of cash on deposit in the general operating account is withheld tax that constitutes a trust fund for the Commonwealth that is enforceable against the employer or any person receiving any part of the fund.
(5) Any excess of the tax deducted over the lowest intermediate balance is withheld tax that has been received by the employer and disbursed. Authority The provisions of this § 113.16 issued under section 354 of the Tax Reform Code of 1971 (72 P. S. § 7354). Source The provisions of this § 113.16 adopted December 26, 2003, effective December 27, 2003, 33 Pa.B. 6423. No part of the information on this site may be reproduced for profit or sold for profit. This material has been drawn directly from the official Pennsylvania Code full text database. Due to the limitations of HTML or differences in display capabilities of different browsers, this version may differ slightly from the official printed version.