Pennsylvania employees with invalid PSD codes are reported in the W2 Exception Register report and an Employee W2 is not created for such employees.

The W2 Exception Register reports the following employees as an exception and these employees do not receive a W-2 for 2013 or later:

• Employee's work PSD code is invalid (990000) and their resident PSD code is either valid, 880000 (out of state) or 510101 ( Philadelphia) and they have work local tax withheld greater than zero (0).

• Employee's resident PSD code is invalid (990000) and their work PSD code is either a valid PSD code, 880000 (out of state) or 510101 ( Philadelphia) and they have resident local tax withheld greater than zero (0).

• Both the employee's work PSD code and resident PSD code are invalid (990000) and they have local income tax withheld greater than zero (0).

However, in certain cases, correcting the employee's invalid PSD codes might prove to be very difficult such as when an employee is terminated and claimed Pennsylvania as their state of residence but failed to submit the Residence Certification Form prior to termination. In such a scenario, correcting or adding the proper school district code to correct the PSD code may not be possible.

Oracle US Payroll enables you to determine whether employees with invalid PSD codes are to be reported in the W2 Exception Register or will receive a W-2 with a potentially invalid or incorrect TCD code in Box 20. The setting for the HR:Allow invalid PSD codes on W-2(Y/N) profile option will determine whether or not the employee is reported in the Employee W-2 PDF, W2 Register reports or the W2 Exception Register.

Before you run the Employee W-2 PDF, W2 Register reports or the W2 Exception Register report, review the setting of the HR:Allow invalid PSD codes on W-2(Y/N) profile option.

   Setting the HR:Allow invalid PSD codes on W-2(Y/N) Profile Option

You can set the HR:Allow invalid PSD codes on W-2(Y/N) profile option to either 'Y' or 'N' or leave the profile option value blank.

The following settings for this profile option will determine whether the employee is reported in the Employee W-2 PDF and W2 Register reports or the W-2 Exception Register report:

1. The profile option is set to 'N' or left blank: Any Pennsylvania employee with an invalid PSD code that meets one of the three scenarios will be reported in the W2 Exception Register and no Employee W-2 PDF will be generated. Note that this is the default behavior.

2. 2. The profile option is set to 'Y': This value overrides the default behavior and employees with invalid PSD codes that meet the conditions listed above will receive an Employee W-2 PDF and will also be reported in the Employee W2 Register instead of the W2 Exception Register. (Reminder: In this case, the employee's W-2 may contain invalid or incorrect PSD code in Box 20.)