Company and Employee Setup for Pennsylvania Local Tax Codes

This chapter contains the following topics:

• Setting up Company Tax Information
  • About Resident and Non-Resident Tax Codes
  • About School District Tax Codes
  • About Tax Codes with Zero Rates
  • About Reciprocity Information
  • Reporting Pennsylvania Local Tax Information
• Setting up Employee Tax Information
  • Scenario 1
  • Scenario 2
  • Scenario 3
  • Scenario 4
  • Scenario 5

Setting up Company Tax Information

To set up Pennsylvania local tax jurisdictions for your company:

1. Determine the jurisdictions you need by accessing the Governor’s Center for Local Government Services Web site at: http://ctcoas01.state.pa.us/dced/mss.finstat_menu.show.
2. Click on the "Tax Rate" selection for the current year, select the appropriate tax and follow the instructions on the screen. The Web site gives local tax rate and tax agent information for the current year.

3. After identifying the tax jurisdictions you need, access the Pennsylvania Linked Local Tax Codes Listing from the Ultimate Software Documentation Web site to set up the correct UltiPro Pennsylvania local tax codes and linked codes.
4. For each jurisdiction, you should set up all of the following tax codes:

• Earned income tax (EIT)
• School district
• Occupational/Emergency Medical Services Tax
• Occupational School District

The following jurisdictions must also be set up with additional tax codes that are designated as workers' compensation (WCC) tax type in the system:

• PAPITTER - Pittsburgh Employer Payroll Expense Assessment
• PA106052 - Altoona (Pennsylvania) Additional Tax

These are not actually workers' compensation taxes; however, they are set up as WCC tax codes to facilitate providing all applicable taxes for all jurisdictions.

Prior to running the Pennsylvania Local Tax Agent utility, you must ensure that you are using location-based taxes, that the necessary local tax codes are added to the company, and that the tax codes are set up with work-in information.

To set up location-based taxes:

1. From the File menu, select Setup, then Company.
2. Check the Location based taxes field on the Tax Options tab of the master Company Setup window.

Important! If you use this utility, multiple locations should not be paid on the same check or incorrect tax agent reporting may result.

3. Click Save.

To add Pennsylvania local tax codes:

1. Select a component company.
2. From the File menu, select Setup, then Tax Codes.
3. Select Local from the drop-down list.
4. Click the Add Codes button. The Create Tax Codes window appears. 
5. Select the appropriate information too add Pennsylvania local tax codes and click OK.
6. Click Save.

To add Pennsylvania local tax code work-in information:

1. From the File menu, select Setup, Codes, then Locations.
2. On the Tax tab of the appropriate location code, enter the work-in information.
3. Click Save.

About Resident and Non-Resident Tax Codes

Some local tax jurisdictions apply different tax rates based on whether the employee resides in the same jurisdiction in which the employee works; other local jurisdictions do not apply any tax to employees who do not reside in the jurisdiction in which the employee works. For local jurisdictions that do not apply a tax to employees who do not reside in the jurisdiction, the non-resident tax code for those jurisdictions are set up with a zero rate in the tax tables. If your company has employees working in resident-only taxing jurisdictions, it is recommended that you set up the non-resident tax code for the company and for employees who work but do not reside in the jurisdiction.

About School District Tax Codes

For school districts that cross counties, the system provides a separate school district tax code for each county. The appropriate school district tax code is available based on the employee’s resident county. School district tax codes are also available for school districts that do not impose taxes. If your company has employees who reside in school districts that do not impose taxes, it is recommended that you set up the school district tax code for the company for employees who reside in the jurisdiction.

About Tax Codes with Zero Rates

In addition to local income and school district tax codes that may be set up with a zero rate (as noted in previous sections), other local jurisdiction tax codes may be set up a zero rate (such as occupational tax codes). If your company has employees who work or reside in a jurisdiction with a zero rate, it is recommended that you set up the tax code for the company and for employees who work or reside in the jurisdiction.

About Reciprocity Information

The Pennsylvania Linked Local Tax Codes Listing indicates which of the following resident withholding requirements is applied by each Pennsylvania local jurisdiction. However, each local jurisdiction may have additional withholding requirements.

• A – Tax credit based on flat percentage rate with a limit rate
• D – Apply the difference
• F – Withhold the full tax amount
• L – Apply the difference – Local only
• P – Tax credit based on a flat percentage rate
• R – Tax credit percentage rate based on resident/work-in withholding
• S – Apply the difference – State only
• W – Within state local tax credit
• X – Exempt if work-in taxes are withheld

It is not necessary to indicate reciprocity for jurisdictions that provide a credit to residents for local income taxes that are withheld in another jurisdiction. For example, for those jurisdictions indicated as “Exempt if work-in taxes are withheld”, it is not necessary to set up the employee as not subject to resident taxes. For additional information about local jurisdiction reciprocity and how to set up an employee who is not subject to either work in or resident taxes, refer to

• Understanding State Withholding Reciprocity
• "Taxes" chapter of the Employee Maintenance Guide

Reporting Pennsylvania Local Tax Information

Refer to the "Using the Pennsylvania Local Tax Agent Utility" chapter of this guide for information.

Setting up Employee Tax Information

After setting up location codes, you must add them to the employees.

To add location codes to employees:

1. From the Employee menu, select View/Edit.
2. Select an employee.
3. From the Taxes folder, click the Add Code button. The Employee Location Add Dialog window appears.
4. Select the appropriate location to add and click OK.
5. Click Save.

The following scenarios include information for setting up both locations and employees for Pennsylvania local tax jurisdictions.

• For additional information about setting up locations, refer to the Locations chapter of the Company Setup Guide.
• For additional information about setting employee tax information, refer to the Taxes chapter of the Employee Maintenance Guide.

In scenarios one through four, the employees work in the company’s Pittsburgh, Pennsylvania, facility. The employer has set up a location code for the Pittsburgh facility in which the employee works with the following local tax codes applicable to Pittsburgh, Pennsylvania:

Scenario 1

An employee resides and works in Pittsburgh (Allegheny County), Pennsylvania. The employer assigns the PITTS-Pittsburgh location to the employee on the Employee Tax & Location Setup Window.

The employer wants to withhold the appropriate local taxes for both the employee’s work-in and resident tax jurisdictions. For the Pittsburgh location, the employee should be set up as follows on the Local tab of the employee’s PITTS-Pittsburgh location and tax window:

Scenario 2

An employee resides in Butler Township (Butler County), Pennsylvania and works in Pittsburgh (Allegheny County), Pennsylvania. The employer assigns the PITTS-Pittsburgh location to the employee on the Employee Tax & Location Setup Window.

The employer wants to withhold the appropriate local taxes for both the employee’s work-in and resident tax jurisdictions. For the Pittsburgh location, the employee should be set up as follows on the Local tab of the employee’s PITTS-Pittsburgh location and tax window:

Scenario 3

An employee resides in Derry Borough (Westmoreland County), Pennsylvania and works in the Pittsburgh facility. The employer assigns the PITTS-Pittsburgh location to the employee on the Employee Tax & Location Setup Window.

The employer wants to withhold only the work-in local taxes for the employee. The employee should be set up as follows on the Local tab of the employee’s PITTS-Pittsburgh location and tax window:
 

Scenario 4

An employee resides in Uniontown (Fayette County), Pennsylvania and works in the Pittsburgh facility. The employer assigns the PITTS-Pittsburgh location to the employee on the Employee Tax & Location Setup Window.

The employer wants to withhold only the resident local taxes for the employee. The employee should be set up as follows on the Local tab of the employee’s PITTS-Pittsburgh location and tax window:
 

Scenario 5

An employee resides in Pennsbury Village (Allegheny County), Pennsylvania and works in the company’s Pennsbury Village (Allegheny County), Pennsylvania, facility. The employer has set up a location code for the Pennsbury Village facility in which the employee works with the following local tax codes applicable to Pennsbury Village, Pennsylvania.

The employer assigns the PENNS-Pennsbury Village location to the employee on the Employee Tax & Location Setup Window. The following rates are applied to Pennsbury Village tax codes.

Instead of withholding both the resident and school district taxes, the employer wants to withhold at the higher non-resident tax rate for Pennsbury Village and not withheld school district taxes. For the Pennsbury Village location, the employee may be set up as follows on the Local tab of the employee’s PENNS-Pennsbury Village location and tax window.