Regarding the PA Local Tax Reporting requirements - The Aatrix system in 2018 pulls in the PSD codes but it is using the code on the employee master record (shown below). The code must also be retained on the PR_PayrollHistoryTaxReporting table (like it was on PR_40) because this is the actual transaction history and the generation of the PA Local Tax Earned Income form (filed quarterly) should use the detail transactions/PSD codes to determine local tax liability.

• It does not appear that the system uses the detail/check transactions to determine the employee local tax liability because it is using the code associated with the employees state tax group. I completed the following test:
 I ran the QTR 1 report form and then changed the PSD code for one of the employees and ran the form again and the form was recreated with the new PSD code.
o That confirms that you will get only one entry per quarter per employee which is wrong because if someone moves to a different local taxing body in the middle of a reporting quarter, they should have 2 entries on the local report.
o Also, if you ever need to re-run a report and the PSD was changed because someone moved (one or more times) then recreation of a previous report will be wrong because if will use the current and only PSD code associated with the PA state tax group.
• The PSD code should be associated with the local tax groups (lines 3 and 4 below) because that is where it is derived and consequently if the code is loaded into the PSD code field available on the PR_payrollHistoryTaxReporting file (like it is on the old PR_40 file), reports can be generated and would reflect the proper taxing municipality during each pay cycle/check.

**With the current setup (one PSD code per employee – associated with the PA state tax group), the only way you can be confident the local tax reporting is accurate is if people never move (unless there is another transaction file that does have the PSD code saved) but from the tests I have run it does not appear so.

Also, I tried to add a PSD code on the local tax group lines but you cannot edit the PSD code on these lines.

If you have any questions or need further clarification contact me.

by: Karen M. | over a year ago | Payroll / Job Cost