P0207 is creating residence tax area based on check date?

Experts,

Here is our scenario, the employee is in tax company A for payroll period 1. He has IT207 with UT set up for tax comp A. Then he is transferred to tax comp B since period 2. His IT207 is changed to PA since the transfer date. Both payrolls runs fine.

Now we  are doing a retro calculation back to period 1. It errored out in period 1 saying tax Authority PA doesn't exist for Tax comp A in table T5UTI.

I don't understand why the system is issuing this error because the employee is not in Tax Comp B yet for period 1. We have our master data change date maintened on start date of period 2 only. When trying to debug the payroll calculation it looks like function P0207 is creating residence tax area based on check date (the checkdate of period 1 falls in period 2). I tried to set up PA in Tax Comp A with tax ID 99999 and then it ran successfully. And it didn't create tax payment of PA in Tax Comp A either. But I just feel wierd that in a transfering I have to set up the new tax Authority for the old tax company.  Please help me understand this better...

Thanks a lot....