A Political Subdivision Code, or PSD, code is a unique six-digit number that identifies political subdivisions such as cities, boroughs and towns. PSD codes are issued by the Department of Community and Economic Development of the state of Pennsylvania. PSD codes aid in the administration of taxation, explains the DECD.
Tax collection districts use PSD codes to identify each municipal and school district in order to ensure that earned income taxes held by employers in the district are accurately disbursed to the appropriate tax authorities, according to the Blair County Tax Collection Bureau. PSD codes are used by tax authorities to identify a taxpayer's residential address and place of work. Municipalities are identified by a six-digit code, school districts use a four-digit code and tax collection districts use a two-digit PSD code, according to the SAP Community Network.
The Pennsylvania Act 32 of 2008 came into effect on January 1, 2012, and it mandated that all tax authorities, tax collection officers and employers must use the PSD codes applicable to their jurisdictions. This earned income tax legislation requires all employers who conduct business in the state to withhold locally earned income tax whether or not the income is earned at a Pennsylvania business location or remotely from within the state, according to the Pennsylvania Department of Revenue.