Overview
Updated 04/11/2023
PA Local Tax Knowledge
Earned Income Tax (EIT)
City taxes and School District taxes are called Earned Income Taxes (EIT). EIT tax rates are calculated from the resident geocode and worksite geocode. The EIT rate owed and to be withheld is always the higher of the two rates in Vertex (Vertex will automatically do this). Please note that Philadelphia taxes are the exception and these residents do not pay any other Pennsylvania municipality taxes.
Local Services Tax (LST)
Occupational Privilege Tax (OPT) or Local Services Tax (LST) are withheld from the employment location (worksite geocode), regardless of the residence location, for both Pennsylvania residents and nonresidents working in Pennsylvania. Pennsylvania residents working in other states are exempt from these taxes.
Political Subdivision Codes (PSD)
PSD Codes are six-digit numbers that uniquely identify each municipality—township, borough, city—in Pennsylvania. PSD Codes play an integral role in assisting employers and Local Tax Collectors to remit and distribute the correct amount of local Earned Income Tax to the appropriate taxing jurisdictions.
PSD Code Breakdown:
Residency Certification Form:
(Pennsylvania) Employees are required to complete a Residency Certification Form upon hire (and with any subsequent change in address) in order to confirm the PSD Codes and EIT Rates being used by the employer for the employees’ local taxing purposes. Employers maintain this form in the employees’ personnel files. (Source: http://dced.pa.gov/local-government/local-income-tax-information/psd-codes-and-eit-rates/ 08/2017)
When the employee’s Resident PSD code is provided in the Residency Certification Form; the PSD code’s corresponding County, School District, and Municipality can be found on the Pennsylvania Local website’s ‘PSD Codes – Excel Spreadsheet’ http://dced.pa.gov/local-government/local-income-tax-information/
Set up PA Local Taxes in Avionte
Pennsylvania Local Taxes are calculated through Vertex from the Employee Geocode/School District settings and the Order Address Geocode.
Pennsylvania Employee Set Up:
Address Set Up:
To set up Pennsylvania Local Taxes for an employee:
- Determine the correct Municipality and School District information from the Resident PSD Code and the Pennsylvania website
- Example: Resident PSD Code provided on the Residency Certification Form was 731602
- PSD Codes – Excel Spreadsheet is utilized to determine the correct Municipality and School District:
- Within Avionte go to Employee > Detail > Address
- Select the Geocode for which the ‘Local’ matches the Spreadsheet’s provided ‘Municipality’
- Select the School District matching the Spreadsheet’s ‘School District (SD)’
Employee PSD code Set Up:
In Employee > Extra choose the extra ‘ResidentPSDCode’, and enter the 6-digit PSD code into the value.
Employee PSD Code Example:
Note: If entering or updating multiple employee PSD codes; the ‘Get PA Employees missing Resident PSD Code AQ’ can be utilized.
Pennsylvania Worksite Set Up:
Address Set Up
Go under the Customer > Detail > Address and set up the Geocode with the correct locality – screenshot below
-The Address set up here will directly affect your orders
-Worksite Addresses can be set up here are well
Worksite PSD codes:
There are two options for setting up Worksite PSD Codes
- Worksite PSD codes are worksite records by navigating to the Reports section and running the ‘Get and Set Worksite PSD Codes AQ’. To utilize this AQ you will first need to select the ‘Action Type’ of View Missing and then Run Query; this will return all worksite addresses which are missing a PSD code. You will then change the ‘Action Type’ to Update PSD> Enter Street> Enter Zip> Enter PSD Code> Run Query. This will update the Pennsylvania Worksite address with the PSD codes. More information is available here: Standard AQ - PSD Codes
- Adding Worksite PSD codes to your Branches by navigating to the Admin Tools > Add/Edit > Branch Properties > PSD Code. This will make is so any worksite under this branch will default to this PSD Code.
How to determine Resident PSD codes and Tax Rates
Determining a Resident PSD
Pennsylvania employees are required to complete a Residency Certification Form upon hire (and with any subsequent change in address) in order to confirm the PSD Codes and EIT Rates being used by the employer for the employees’ local taxing purposes. Employers maintain this form in the employees’ personnel files. This is an extension of the Federal W4.
When the employee’s Resident PSD code is given to the Residency Certification Form; the PSD code’s corresponding County, School District, and Municipality can be found on the Pennsylvania Local website’s ‘PSD Codes – Excel Spreadsheet’ http://dced.pa.gov/local-government/local-income-tax-information/
Determining a Worksite PSD
From the Employee Address and Worksite Address:
- Requires a residential AND work location. Enter the same address in both sections
- Choose the address that best matches the expected City/County
- This site will display the local taxes that should be assessed:
From the County, School District and Municipality information:
- Requires the County, School District, and Municipality information for the location
- This site will display the local taxes that should be assessed:
Neither of the above options assign the correct PSD codes?
Pennsylvania states you may also visit the US. Census Bureau’s AmericanFactFinder to determine the municipality and school district for your address search. Then, contact the Tax Collector/Officer to determine your local rates and PSD codes. If you still receive no results, try an internet search on the City and State of the home and work address to determine the County for each. Then, contact the Tax Collector/Officer to determine your local tax rates and PSD codes. (Source: http://munstats.pa.gov/Public/FindLocalTax.aspx 08/2017)
Avionte Tax Reports:
Reports where PA Local Taxes can be found are: Taxes Summary Lite, Taxes Summary AQ, Taxes Remittance EE, Taxes Remittance ER, and the Get PA EIT Details AQ.
- To calculate Pennsylvania Local EIT Taxes, add up all the Pennsylvania city taxes and school district (SD, ASD, MSD) taxes for a given tax period.
- To calculate Pennsylvania Local LST Taxes, add up all Pennsylvania local taxes labeled with a EMS/OPT (ie. Swatara TWP EMS) on report for a given tax period. LST taxes are often called EMS/OPT taxes in Avionte because of the recent name change.
Example of Pennsylvania Local Taxes on a Taxes Summary Report:
Electronic Filings (Avionte Pennsylvania Local Exports)
The current exports that Avionte has available to submit Pennsylvania locals electronically are for bulk electronic filing with a single Local Income Tax Collector, which will then distribute taxes accordingly to the correct Tax Collection Districts based on employee and worksite PSD codes set up in the above section.
Avionte presently has the below exports for these Local Income Tax Collectors:
- Berkheimer: supports EIT & LST
- Keystone: supports only EIT; Keystone has the option to quick file for LST taxes on their website.
*if a user submits to a different Local Income Tax Collector than the above exports, the above exports can still be used depending on the efile specs of the Local Income Tax Collector. Please talk to tax team and the tech services team for these situations.
Remitting to a single Local Income Tax Collector works well for businesses that utilize a central Pennsylvania office location and can remit all local taxes through their singular Local Income Tax Collector; as well as for businesses with multiple worksite locations across the state who choose to make ‘combined filing and remittances’ of all local Earned Income Tax (EIT) withholdings to a single Local Income Tax Collector.
Important Notes:
- The process of combined filings and remittance is not available for LST taxes, and these must be remitted to their respective Local Income Tax Collector.
- The process to make ‘combined filings and remittances’ must be approved by the single local tax collector the business choses to file and remit through.
- Avionte doesn’t have reports/feeds to submit Pennsylvania locals electronically to multiple Local Income Tax Collectors. Users who choose to utilize the multiple Local Income Tax Collectors method need to file and remit Pennsylvania Local Taxes to each respective Local Tax Collection District by quarterly paper returns or manually through their respective Local Income Tax Collectors websites.
Other Pennsylvania Local Taxes Information
Pennsylvania local Information webpage:
Pennsylvania local FAQ:
Pennsylvania Local Legislature:
-
http://dced.pa.gov/download/act-32-of-2008-procedure-manual/?wpdmdl=56767
- (Pages 84 -97 are Withholding and Remittance)
Pennsylvania List of Tax Collection Districts and Local Income Tax Collectors:
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