US Tax

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1. Taxability Model
2. With the taxability model, user will be able to configure which tax authorities and tax types that a particular wage type should be taxed.
   
   With the taxability model, user will be able to have wage type M123 only taxed for Federal withholding but not other tax authority or tax types.
   There are 3 steps to define the tax model for a particular tax authority.
   a. Define Tax Type Combinations
   User will first define the tax type combination, which contains the tax types that apply for a wage type.
   
   If a particular wage type will be taxed for tax type 01, 03, and 04, the following tax type combination should be defined:
   

   Tax Type Combination	Tax Type	Description
   1	01	Withholding
   1	03	Employee Social
   1	04	Employer Social Security Tax

   b. Tax Model
   The next step will be to define the tax model based on Res/Work/UI, tax modifier, and the taxability classification defined in processing class 71.
   
   To define a tax model for Resident, tax modifier U1, and taxability classification E which only tax for tax type 01, 03, and 04 (Tax combination 1 defined in the last step), it should look like the following:
   

   Tax model	Res/wrk/Ul	Tax modif	Tax Class	Tax Type Comb
   1	R	U1	E	1

   c. Tax authority model
   The last step is to assign the tax authority to the tax model defined in the last step.
   
   To assign tax authority "FED" to tax model "1":
   

   Tax Authority	Tax model	From	To
   FED	1	01/01/1900	12/31/9999

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Tax

In this chapter you will set up US Tax calculation for your company. Sample entries for tax processes have been delivered in client 000.
Source https://www.wikinewforum.com/showthread.php?t=19493

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SAP/BSI Interface

The U.S. Payroll Driver interfaces with BSI, a third-party software application, to perform tax calculation. You must contact BSI directly to obtain the tax calculation software and periodic tax data updates. All SAP customers must be using the latest version of the BSI TaxFactory software. As of June 2005, this is version 7.0.

For information on how to access BSI Tax Update Bulletins (TUBs), you can visit the SAP U.S. Payroll web site at http://service.sap.com/hrusa.

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Specify location of Tax Factory executable

Use: In this activity, you specify the location of the TaxFactory executable; either on the Application Server or on a separate workstation.

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Specify level of messages to be returned

Use: In this activity, you specify the level of messages to be returned from the TaxLocator executable.

Activities
1. Execute the activity.
2. In the subsequent table, select Position and enter the constant TFMSG and select Enter.
3. Enter the required value in the Value column, according to the following list:
0: NO CALCULATION ERRORS
1: INFORMATIONAL MESSAGES
2: LEGALITY MESSAGES
3: CALCULATION ERROR(S)
9: FATAL CALCULATION ERROR.
4. Save your entries.

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Tax Companies
In this section you define tax companies and their Employer Identification Numbers (EIN).

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Tax companies for Tax Reporter

The tax companies you define in this section affect how taxes are reported in Tax Reporter. If your company plans to use the Tax Reporter component, please read the IMG documentation for defining reporting and transmitting tax companies (under the Tax Reporter section of the IMG) before you set up your tax companies in this section.

For more information, please see:

Define reporting tax company
Define transmitting tax company

Tax Reporter: In this chapter, you set up tax reporting for your company. The SAP HR tax reporting process consists of three main steps: Tax Reporter preparation:

Evaluation of tax form wage types and storage of their amounts
Tax Reporter generation
Evaluation of the stored tax form wage type amounts
Output
Issuance of tax forms on either paper or magnetic media (tape or diskette)

In the first section of this chapter, you maintain a number range for the tax interface tables, define which tax company you will use to transmit your tax forms, and define personnel events for transferring employees in and out of Tax Reporter.

In the second section, you define your tax form groups. This involves defining which wage types (which can vary according to tax authority) are used for the various tax forms.

In the third section, you define your tax forms. This involves defining the reporting periods for which each wage type must be cumulated and output, and the tax authority to which the tax form must be submitted.

In the last section, you define the layout of your tax forms

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Define tax companies : In this step you define all tax companies for your organization.

Activities: Enter the names and descriptions of your organization's tax companies.

IMG Path & Table: Define Tax Company

Path: Payroll -> Payroll: USA -> Tax -> Define Tax Company

Table: T5UTL

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Assign tax company to personnel area
In this step, you check which tax company is assigned to each personnel area/subarea and change the assignment if necessary.


IMG Path & Table: Assign Tax Company to Personnel Area
Path: Payroll à Payroll: USA -> Tax -> Tax Companies -> Assign tax company to personnel area

Table: V_T5U0P

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Tax company
Four-character designation of a legal entity for tax reporting purposes. Each such designation is assigned a distinct Employer Identification Number (EIN) and is mapped to a BSI tax company for tax calculation purposes.

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Employer identification
Employer Identification No. (IRS 9-digit Tax Number) required for EEO reporting

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Standard industry code
Code identifying the industry in which the employer is active.

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Dunn & Bradstreet Number
This field is for storing the Dunn & Bradstreet number associated with the company.

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Company ID
Number (CO=XXXXXX-X) assigned by the EEOC to an organization's headquarters location and establishments employing fifty or more persons.

Use: DO NOT change the number for any establishment.


Organization reporting unit
The EEO unit number (U=XXXXXX-X) assigned by the EEOC to an organization's headquarters location and establishments employing fifty or more persons.

Use : Do NOT change the number for any establishment.
When new establishments of an existing company are opened, or are of a size to be reported for the first time, leave the unit number blank until you receive an EEO unit number from the EEOC.

Organization reporting unit for Vets-100 Report
The VETS-100 unit number assigned by the VETS-100 processing office.

Use : Do NOT change the number for any establishment.

If your company has reporting units that must file VETS-100 reports, but have not yet been assigned a number by the VETS-100 office, use a reporting unit number starting with "Z$$" (e.g. "Z$$00001"). Once you receive a VETS-100 number from the U.S. government, replace the old "Z$$00001" with the official reporting unit number.

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Workers' compensation employer number
This field stores the employer number specifically related to the company and specifically for workers' compensation.

Workers' compensation account number
This field stores the account number specifically related to the company and specified by workers' compensation.

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Define BSI tax company
In this step you define all tax companies which have specific experience rates.

Activities
After completing all customization steps, you must also maintain the same table entries in the BSI database with the BSI client GUI.

Further notes
For further information on BSI, please refer to Note 100944 in the Online Service System (OSS).



IMG Path & Table: Configure BSI Tax Company
Path: Payroll -> Payroll: USA -> Tax -> Tax Companies -> Define BSI tax company

Table: BTXCOMP

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Define tax identification numbers by BSI tax company
In this step you assign each employer identification number to a BSI tax company.

Activities
1. Enter the employer identification number to be associated with a rate.
2. Enter the tax company to which the employer identification number belongs.
3. After completing all customizing steps and configuring other necessary clients (except for this step), you must copy these entries into the other clients. This is not managed by the usual client copy utilties. The program for copying the entries is called 'Update Clients' and can be found in the US Payroll menu: Per payroll period -> Tools -> Tax Utilities.

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IMG Path & Table: Define Tax Identification Numbers

Path: Payroll -> Payroll: USA -> Tax -> Tax Companies -> Define tax identification numbers by BSI Tax Company

Table: T5UTH

In this step you assign each employer identification number to a BSI tax company.

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IMG Path & Table: Define Federal/State/Local Employer ID Number

Path: Payroll -> Payroll: USA -> Tax -> Tax Companies -> Define federal/state/local employer ID number

Table: V_T5UTI

In this step you define federal, state and local employer ID numbers within each tax company.

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Tax authority

This field identifies a government agency that is authorized to levy certain taxes. Depending on the jurisdiction of the agency, the level of the tax authority may be:

Federal
State (e.g. Washington)
County (e.g. King)
City (e.g. Seattle)
School district

Tax type
The type of tax to be levied by the authority, e.g. Withholding, Unemployment, Social Security.

Employer Identification number
The employer identification number assigned by the tax authority.

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Tax-Related Wage Types

In this section, you maintain tax-related wage types. This involves assigning processing classes and valuation bases to your wage types as well as creating statement wage types for storing the grossed-up value of wage types.

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Maintain tax-related processing classes

In this step you set the values for the following processing classes for all tax wage types. This allows you to control the way the wage types are processed by the payroll system.


IMG Path & Table: Maintain Tax-Related Processing Classes

Path: Payroll -> Payroll: USA -> Tax -> Tax-Related Wage Types -> Maintain tax-related processing classes
Table: V_512W_D

The processing classes involved in this step are

Processing class - Definition
---------------------------------
67 Work tax area override proration for supplemental wages
68 Payment type for tax calculation
69 Taxable earning or non-taxable earning
70 Work tax area override proration for salaried employees
71 Wage type tax classification
72 Employer / employee tax
84 Non-cash income type for tax calculation


Note: See Processing classes used in work tax area override processing for further information on processing classes 67 and 70.


Example: Taxes for wage type M002 (Monthly Salary) should be calculated using the regular method and as the employee's tax liability.
Values to enter:


Processing class 68 - Payment type for tax calculation: 1 Regular method
Processing class 69 - Taxable or non-taxable earnings: 1 Taxable earnings
Processing class 71 - Wage type tax classification: 0 Regular wages
Processing class 72 - Employer/employee tax: 1 Employee tax


Activities For each wage type relevant for taxes, set the values within processing classes 67, 68, 69, 70, 71, 72 and 84 as required.

Summary:

Processing
Class	Definiton
67	Work tax area override proration for supplemental wages
68	Payment type for tax calculation
69	Taxable earning or non-taxable earning
70	Work tax area override proration for salaried employees
71	Wage type tax classification
72	Employer / employee tax
84	Non-cash income type for tax calculation

Note: See Processing classes used in work tax area override processing for further information on processing classes 67 and 70.

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Here one Wage type Example of PC 67, 68, 69, 70 & 71

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IMG Path & Table: Maintain Gross Up Wage Types

Path: Payroll -> Payroll: USA -> Tax -> Tax-Related Wage Types -> Maintain gross up wage types
Table: V_512W_B


In this step you will create a wage type to be used for storing the grossed up value of a wage type. You will also link the new wage type to the grossed up wage type.

Maintain gross up wage types In this step you will create a wage type to be used for storing the grossed up value of a wage type. You will also link the new wage type to the grossed up wage type.

Example
Gross up wage types : 9991, 9993.
Statement wage types : 9992, 9994.

Requirements
This step must be executed for any 'gross up wage types' (wage types for which you have entered a value of 5 or 6 in processing class 68 in the previous step).

Wiki Recommendation: You only have to perfom this step if you have gross up wage types.

Activities
1. Create a new wage type (statement wage type) which will be used to store the grossed up value of the original wage type. You may copy the delivered entry M032.
2. Save the entry.
3. Repeat the step above once for each gross up wage type. If the values entered were those of our example above, you would create two entries (because there are two gross up wage types - 9991 and 9993) which would be named 9992 and 9994.
4. Select the first gross up wage type; 9991 in our example.
5. Enter the corresponding statement wage type in the statement wage type field. If you were following the example, you would enter 9992 in the statement wage type field for 9991.
6. Save the entry.
7. Repeat steps 4, 5, and 6 for any other gross up wage types. For this example you would repeat the steps once.


Further notes
You can also perform gross up calculations on non-cash benefits. To do this, use this step to define a 2nd derived wage type representing the cash portion (the calculated tax amount) of the gross up calculation result. This cash wage type can then be used in cumulations, such as /101 Total gross.

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Maintain non-cash income wage types
In this step you assign non-cash income attributes to payment wage types.

Standard settings: Taxes from tip income are calculated and stored separately from regular income, so that you can specify different deduction priorities and rules.

In retroactive calculation all non-cash income wage types are taxed according to the 'tax when earned' principle.

Recommendation: You only need to perform this step if you have non-cash income wage types.

Activities
Assign the appropriate processing class 84 specification to all of your non-cash income wage types.

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Maintain distribution payment wage types: There are two steps in this section:

1. Maintain distribution codes: SAP supports the following seven distribution codes:

1: Early Distribution: Payment to employees who are receiving retirement distributions and have not reached the age of 59 years and 6 months.
2: Early distribution, exception applies - as defined in Section 72(q), (t), or (v).
3: Disability: Payments to employees who are eligible for disability payments from their retirement account
4: Death: Payments made to a decedent's beneficiary.
7: Normal Distribution: Regular distribution of funds to a retiree who is at least 59 years and 6 months old. This code is used if no other code applies.
G: Direct Rollover to IRA: Use this code is used when the funds from the pension fund are transferred into an IRA.
H: Direct rollover to a qualified plan or tax-sheltered annuity.
If you require additional codes, please contact SAP.

2. Define distribution payments
In this step, you assign a distribution code to a tax wage type.

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Tax-Related Payroll Schemas and Rules
This section contains information on configuring payroll calculation rules and schemas used in the calculation of taxes.

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Maintain payroll calculation rule for unemployment

In the first activity of this step, you maintain payroll calculation rule UUIM (Unemployment insurance and work center mandatory?). This rule determines whether it is mandatory for employees to provide information on worksite and unemployment status. In the second activity, you update schema US Tax calculation (UTX0), which calls the rule.


Standard settings

The standard rule determines whether unemployment information is mandatory based on the employee subgroup:
Subgroup U1: Unemployment information is mandatory
Subgroup UX: Both unemployment and worksite information are mandatory

All other subgroups: Neither is mandatory

Activities: Maintain payroll calculation rule for unemployment information:

1. Copy rule UUIM to a customer rule name, e.g. ZUIM.
2. Modify your copy of the rule (do not modify UUIM).
3. Based on the employee's organizational assignment, determine whether or not unemployment information is mandatory.
4. If unemployment information is mandatory, type UUIMA=Y under the first operation.
5. If both unemployment and worksite information are mandatory, type UUIMA=YY under the first operation.
6. Save the rule.

Update schema UTX0:
1. Wherever UUIM appears in schema UTX0, replace it with your copy of the rule (ZUIM in this example).
2. Save and generate the schema.

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Maintain payroll schema for withholding information
In this step, you maintain payroll calculation schema Basic data (US), which determines whether withholding information is mandatory for employees.


Standard settings: As delivered, the schema is defined so that withholding information is required. If withholding information is mandatory for your employees, no change is necessary.


Activities: If withholding information is not required by your company:
1. In the schema, find the line that contains function P0207 and change the first parameter to 1:

Fct Par1 Par2 Par3 Par4 D P Text
P0207 1 Read tax data
2. Save and generate the schema.

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Maintain payroll schema for tax functions

In this step, you maintain function USTAX within the payroll calculation schema US Tax calculation (UTX0). This function determines the way work days are prorated, the way that Earned Income Credit (EIC) and retrocalculations are to be handled, and whether it is necessary to check for non-residence certificates or not.

Standard settings: The standard function is defined as follows. If the settings are correct for your firm, no change is necessary:

Work days are prorated by calendar days.
When an EIC credit is greater that the employee's withholding amount, the entire credit is taken.
When retrocalculation is triggered by an overpayment, the recalculated amount will be taxed in the original period.
Taxes are to be calculated as though a non-residence certificate is on file.

Activities: If these parameters are not appropriate for your company, then they should be changed as follows:
1. In schema UTX0, find the line that contains function USTAX.
2. Change each parameter of function USTAX as required for your organization.
3. Save and generate the schema.

Process BSI tax calculation (USA Process BSI)

Object
Function
Procedure

Function USTAX fills the parameter fields for the BSI tax calculation
module, executes the calculation routine and stores the returned tax
amounts on the results table RT. It also updates year-to-date
accumulators in table TCRT.

1. Build payment type table, and call BSI by payment type.

2. Employee information is set up, taxes parameters are set up, call
BSI tax calculation and collect tax results.

3. Warning message is written to the log. If there is a serious or
fatal error from calling BSI, the employee is rejected.

Access
Func Par1 Par2 Par3

Syntax

Par1 Process taxes USA
1 Prorate calendar days
2 Prorate working days
3 Prorate working hrs

Par2 EIC decision
1 No EIC payment
2 Minimal EIC payment
3 Whole EIC payment

Par4 Non-res. cert. default
1 Always '1' as default
2 From infotype(P0234)

Required Entry

o Parameters 1
o Parameters 2
o Parameters 4


US Tax calculation

Payroll functions available for US tax calculation

UPAR1 - Determine tax method for regular or retro-calculations

URSA - Cap tax withholdings for separate agregate method

USTAX - Process tax calculation

UTPRI - Process tax priority according to tax model

UTWE - Process tax when earned principle

UTXOR - Tax authority override

UNMEX - New Mexico workers compensation tax

UOTX0 - Freeze taxes across year-end

UGUPD - New Mexico workers compensation tax

CPYOT - Copy deduction tables of last for-period to current period

PTCRT - Override negative YTD TCRT check

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Maintain payroll schema for override methods

In the first activity of this step, you maintain the override tax methods used for current payments and for differences from retrocalculations in schema US Tax caculation (UTX0). In the second activity, you define constants that represent threshold amounts for these current payments and retrocalculation differences.

Example
Fkt Par1 Par2 Par3 Par4
UPAR1 CUR NA 1 X
UPAR1 DIF 1 2 X

Constants:
TXCTH Current-payment threshold (annual) = $1200
TXRTH Retro-difference threshold (annual) = $600

If we assume a monthly subunit, the threshold amounts per period are $100 and $50 respectively.

According to this example:
Current payments that are below or equal to $100 are calculated using the regular method (1 in Par3), and those that are above are calculated using the method defined in the individual wage type. This applies to both regular and on-demand payrolls (X in Par4).

Differences from retrocalculations that are below or equal to $50 are calculated using the supplemental method (2 in Par3), and those that are above are calculated using the regular method (1 in Par2). This is true for regular payrolls only (X in Par4).

Standard settings: The standard schema is set as follows. If the settings are correct for your firm, no change is necessary:

Fkt Par1 Par2 Par3 Par4
UPAR1 CUR NA
UPAR1 DIF 1 22 B
Current payments: The calculation method defined for the wage type (processing class 68) is used for current payments. This is true for all payroll types (regular and on-demand payrolls).

Retrocalculated differences: The tax method for all retrocalculation differences is the regular method. This is true for all payroll types (off-cycle and adjustment payrolls).

Activities: If any of the parameters should be changed for your company then proceed as follows:

Activity 1: Adjust schema parameters.

1. Modify schema UTX0 as required:
For each occurence of function UPAR1, change each parameter as required for your organization.
2. Save and generate the schema.
Activity 2: Define the constants for current and retrocalculation difference thresholds.
1. Select the entry TXCTH, and define the annual threshold amount for current payments.
2. Select the entry TXRTH, and define the annual threshold amount for retrocalculated differences.
3. Save your changes.

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Load Tax Data
In this section, you will load standard US tax data. If you have executed the client copy for HR tables at the beginning of your installation, you do not have to complete all of the load steps.

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IMG Path & Table: Maintain States of Operation

Path: Payroll à Payroll: USA à Tax à Load Tax Data à Maintain states of operation
Table: T5UTC

Maintain states of operation
In this step you enter the states in which you operate. This data will be used to populate the relevant tax authorities for your firm.

Activities
1. Enter the states in which you operate (or remove the states in which you do not operate).
2. Enter the validity periods for the states.
3. Save the entries.

Further notes
In the step 'Delete/insert tax table entries' you may run a report to remove the entries for states in which you do not operate, or to update entries from client 000 after tax updates.

In this step you enter the states in which you operate. This data will be used to populate the relevant tax authorities for your firm.

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Delete/insert tax table entries

In this step you may DELETE tax table entries for states in which you do not operate (only for this client). Or, if you choose to run the report with the 'reverse' option, you may INSERT entries within your client number after tax updates.

Example: If 'CA' does not exist as a state of operation for your firm, the the following entries would be removed:

Tax authorities: CA
CA01
Residence tax areas: CA
CA01
Work tax areas: CA
CA01
Tax types per authority: CA 01
CA 10
CA 16
CA 41
CA 48
CA01 19

Requirements
In the previous step, 'Maintain States of Operation', you entered the states in which you operate. These entries will be used to purge the tax tables of superfluous entries and you may leave the 'States' option blank. If you have not maintained this table, ALL tax entries will be deleted unless you populate the 'States' option (it is much more reliable to populate the 'States of Operation' than to remember to enter them here).

Executing the report with the 'reverse' option selected will insert entries which do not exist in your client but exist in client 000, for your states of operation. This should be done after every tax update to ensure that any new tax authorities are available for your client.

Recommendation
Do not execute this report (except using the 'reverse' option) after your site has gone live. Otherwise, you may delete entries which are already used in infotypes.

Further notes
If you accidentally remove entries for states you still want to use, you may execute the report with the 'reverse' box checked. If the entries exist in client 000, the entries will be copied from there.

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Tax Data Maintenance
In this section, you check and define tax data for your organization. It is best to have executed the client copy from client zero before proceeding with this step. If you have not done so, copy the entries from each of the views in this step to your client. Do not execute the client copy now since that will overwrite all of your prior customization.

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IMG Path & Table: Check Tax Authorities

Path: Payroll -> Payroll: USA -> Tax -> Tax Data Maintenance -> Tax Authorities -> Check tax authorities
Table: T5UTZ

In this step, you check all tax authorities valid for your organization. Tax authorities defined here are used in infotypes:

·0161 - IRS Mandates
·0209 - Unemployment State
·0210 - W-4 Withholding Information
·0234 - Withholding Overrides
·0235 - Other Taxes

Note: Review all tasks within Tax Data Maintenance to assure compliance at time of implementation.

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Tax Authorities
In the following steps you check and set up tax authorities for your organization.

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Check tax authorities

In this step, you check all tax authorities valid for your organization. Tax authorities defined here are used in info types:

0161 - IRS Mandates
0209 - Unemployment State
0210 - W-4 Withholding Information
0234 - Withholding Overrides
0235 - Other Taxes

Recommendation: In this step, you can also define the following exemption limit criteria:
Number of allowances limit for each tax authority
Month and day on which an exemption expires for each tax authority

Tax authority: This field identifies a government agency that is authorized to levy certain taxes. Depending on the jurisdiction of the agency, the level of the tax authority may be:

Federal
State (e.g. Washington)
County (e.g. King)
City (e.g. Seattle)
School district


Region (State, Province, County)
In some countries, the region forms part of the address. The meaning depends on the country.

The automatic address formatting function prints the region in addresses in the USA, Canada, Italy, Brazil or Australia, and the county in Great Britain.

For more information, see the examples in the documentation on the Address Layout Key.

Examples
Meaning of the regional code in ...
Australia -> Province
Brazil -> State
Canada -> Province
Germany -> State
Great Britain -> County
Italy -> Province
Japan -> Prefecture
Switzerland -> Canton
USA -> State

Tax level
The tax level defines the hierarchy level to which a tax authority belongs.

Example
The tax authority Federal (FED) belongs to tax level A (federal)
The tax authority California (CA) belongs to tax level B (state)

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Sort number for tax authorities
This number determines the order in which tax authorities appear on the pay statement.

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W-4 indicator

This field indicates whether W-4 (or equivalent) information (from Infotype 0210 - W-4 Withholding Info.) is permissible for the authority and whether this information may be inherited from the federal authority.

For example:
Mandatory: The W-4 information is mandatory. If no infotype record exists for the employee, the employee is taxed according to the valid federal/state defaults

Optional for state (exemption on a separate form): The filing status from the federal authority is used if no information is specified for the state; state exemptions require a separate form.

Not allowed for state (exemption on a separate form): The filing status from the federal authority is used; state exemptions require a separate form. Not applicable for state: The state does not levy withholding tax

Optional for state: The filing status and number of exemptions from the federal authority are used if no information is specified for the state

Not allowed for state: The filing status and number of exemptions from the federal authority are used and Infotype 0210 is not permitted for the state

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Check status of territories
In this step, you may designate whether an authority is a US territory. This information is used in payroll for calculation of certain taxes.

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Check tax authority mapping
In this step, you can display how each SAP tax authority code is mapped to the corresponding BSI tax authority code.

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Define valid filing statuses
In this step, you define all valid filing statuses for each tax authority. Filing status is used in Infotypes 0161 (IRS Mandates) and 0210 (W-4 Withholding Information).

Example
Fed 01 (Federal authority, status 'Single')
Fed 02 (Federal authority, status 'Married')
CA 01 (State of California, status 'Single')
CA 04 (State of California, status 'Married, both spouses working')

Activities
1. Enter the tax authority.
2. Enter the filing status number 1 through 14, according to the text that matches your requirement.
3. Specify the validity period.
4. Save your entries

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Tax Types
In the following steps, you may check tax types and maintain them by tax authority.

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Check tax types
In this step, you may view all tax types available in the system. Tax types are used in wage types and in Infotype 0235 (Other Taxes).


Example
01 Witholding tax
05 Employee medicare tax
10 Employer unemployment

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IMG Path & Table: Maintain Tax Types Per Tax Authority

Path: Payroll -> Payroll: USA -> Tax -> Tax Data Maintenance -> Tax Types -> Maintain tax types per tax authority

Table: V_T5UTD

In this step, you may view all tax types for each tax authority.

Example:

Authority	Tax Type
CA California	01 Withholding
CA California	10 Employer Unemployment
CA California	41 State Disability

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Recommendation: SAP recommends that the formula and rounding indicators NOT be maintained. The standard SAP R/3 system uses the correct formula and rounding indicators for each tax type.


Activities
Only maintain if you have exceptions for the formula or rounding indicators.
1. Enter the required formula number or rounding indicator.
2. Save the entry.

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Formula number
Alternative formula assigned to calculate withholding tax. Only some authorities allow employees to define an alternative method for calculating their withholding tax.

If you assign an alternative formula, it will override the default formula.

Rounding indicator
Define to how many digits the value should be rounded.

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Tax Areas
In the following steps, you check and maintain residence and work tax areas valid for your organization.

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Tax Locator

IMG Path & Table: Activate BSI Tax Locator BADI

Path: Payroll -> Payroll: USA -> Tax -> Tax Data Maintenance -> Tax Areas -> BSI Tax Locator -> Activate BSI TaxLocator BADI
This Business Add In (BAdI) is used to generate a list of tax authorities valid for a given address, when utilizing the BSI TaxLocator.


When active, the BAdI is used:


·To modify the Residence tax area (0207) and Work tax area (0208) infotypes
·To compare existing infotype values with those proposed by BSI's TaxLocator in the Audit Report (RPUTXLU0).


BSI TaxLocator BADI has been activated in the template

If your organization requires any areas not loaded by default, or if you created any custom tax authorities in the step Maintain custom tax authorities then you must maintain all of the tax area steps in this section.

Further notes
There is a report entitled 'Auths not in Area' which enables you to display tax authorities which have not been assigned to a tax area You can access this report in the Payroll USA menu: Info system -> Tax -> Tax Utilities.

BSI TaxLocator - General Information

Use: You can implement the BSI TaxLocator to assist you in proposing tax areas for the Residence Tax Area (0207) and Work Tax Area (0208) infotypes.

If it is not activated, these infotypes (207 and 208) will continue to use zip code-based checking to propose tax areas.
The activities in this section allow you to configure your system to use BSI TaxLocator.

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IMG Path & Table: Add states where BSI TaxLocator is active

Path: Payroll -> Payroll: USA -> Tax -> Tax Data Maintenance -> Tax Areas -> BSI Tax Locator ->Add states where BSI TaxLocator is active

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Activate BSI TaxLocator BAdI
Use: Use this Business Add In (BAdI) to generate a list of tax authorities valid for a given address, when utilizing the BSI TaxLocator.

When active, the BAdI is used: To modify the Residence tax area (0207) and Work tax area (0208) infotypes.

To compare existing infotype values with those proposed by BSI's TaxLocator in the Audit Report (RPUTXLU0).

Requirements: You must have SAP payroll with an active BSI TaxFactory implementation.

Activities
1. Execute the IMG Activity.
2. Activate the delivered implementation HRPAYUS_TF_0001_IMP.

In this step, you add states for which BSI TaxLocator is active.
Although BSI TaxLocator has been activated for all the states in the template, TaxLocator proposes tax areas based on the street address for the states AL, AR, CA, CO, DE, IN, KY, MD, MI, MO, NJ, NY, OH, OR, PA, TX, WA AND WV only. For the remaining states Tax areas are proposed based on the state code

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Add states where BSI TaxLocator is active
Use: In this step, you add states for which BSI TaxLocator is active.
If BSI TaxLocator is active, select the states where BSI TaxLocator functionality should be used. If a state is not included, existing zip code-based processing will take place for addresses in that state.


Activities
Enter the two-letter abbreviation for the state, start date and end date, and save your entries.

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IMG Path & Table: Determine source address location

Path: Payroll -> Payroll: USA -> Tax -> Tax Data Maintenance -> Tax Areas -> BSI Tax Locator -> Determine source address location
Feature: P10TL

Determine source address location

Use: In this step, you use the feature P10TL to determine the source of the address to be passed to BSI's TaxLocator.

Activities

1. In the RWIND decision field, indicate the type of address source you are defining:
Residence = "R".
Work = "W".
Virtual = "V".

2. Based upon any of the other decision criteria in the structure, specify a return value that identifies where the address should be read.

For residence addresses, valid values are subtypes from infotype 6. That is, if subtype 0001 specifies a residence address for your installation, then return '1'.

For virtual addresses, valid values are subtypes from infotype 6. If an address for the employee is found with this subtype, this address is used to generate work tax area proposals. If no address is found, the source specified for work addresses is used.

For work addresses, valid values are tables T500P and T5UAP.

For any of the address types, specifying values other than those specified above requires modification of the Business Add-In that reads the feature.


Example
For Company Code US01, Personnel Area (PA) US01, Subarea (PSA) 0001, the work address to be used should be from T5UAP.

The node for this source will be:

W -> US01 -> US01 -> 0001: return value 'T5UAP'.
If a Virtual address has also been specified for this combination of decision criteria, the virtual address for the employee is used.

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In this step, you use the feature P10TL to determine the source of the address to be passed to BSI's TaxLocator

1.In the RWIND decision field, indicate the type of address source you are defining:
·Residence = "R".
·Work = "W".
·Virtual = "V".

2.Based upon any of the other decision criteria in the structure, specify a return value that identifies where the address should be read.

·For residence addresses, valid values are subtypes from infotype 6. That is, if subtype 0001 specifies a residence address for your installation, then return '1'.

·For virtual addresses, valid values are subtypes from infotype 6. If an address for the employee is found with this subtype, this address is used to generate work tax area proposals. If no address is found, the source specified for work addresses is used.

·For work addresses, valid values are tables T500P and T5UAP.

Example: In the Template, Source for Residence address is IT0006 subtype 1 (RWIND decision field has “R” set to 1). This information is used while proposing the resident tax area in IT0207

Source for work Address is - for Personnel Area U010, work address is determined from table T500P i.e., based on the address of the personnel area (RWIND decision field has “W” set to T500P)

and for Personnel Area U000, work address is determined from table T5UAP i.e., based on the address of the personnel subarea (RWIND decision field has “W” set to T5UAP)

This information is used while proposing the work tax area in IT0208

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IMG Path & Table: Add addresses for Personnel Subareas

Path: Payroll -> Payroll: USA -> Tax -> Tax Data Maintenance -> Tax Areas -> BSI Tax Locator -> Add addresses for personnel subareas

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Add addresses for personnel subareas

Use: In this step, you add addresses for personnel subareas.
Complete this step if you have specified the personnel area/subarea table (T5UAP) as a source for work addresses in the previous step.

For the most accurate proposals from BSI TaxLocator, enter as much address detail as possible.

Activities
1. Enter the personnel area, subarea, start and dates, and the address.
2. Save your entries.

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In this step, you add addresses for personnel subareas.

Complete this step if you have specified the personnel area/subarea table (T5UAP) as a source for work addresses in the previous step.

For the most accurate proposals from BSI TaxLocator, enter as much address detail as possible.

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Specify location of BSI TaxLocator executable
Use: In this activity, you need to specify the location of the BSI TaxLocator executable.

Activities
1. Select Create.
2. Enter the RFC Destination BSI70-US-TXL.
3. Specify the Connection Type T for TCP/IP connections.
4. Go to the Technical Setings tab, under Activation Type.
If the TaxFactory server is to run on the same box, use the default option of Start on Application server
If the TaxFactory server is to run on a separate box, choose Start on Explicit host. Then, under Target host, specify the host name or IP address of the box where the TaxFactory server resides.
5. Enter a description (for example, BSI 7.0 TaxLocator RFC connection) in the corresponding field.
6. Enter the program location as C:\BSI\tl70server.exe.
7. Ensure that the Gateway parameters are set to the same machine that you have defined under Explicit host. Note that the SAP Gateway program (sapgw00, found on the presentation CD), must be activated on the same machine where the TaxFactory 6.0 server runs.
8. Select the Test connection option. If no error messages are issued, then the RFC has been established successfully.

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BSI TF Path: Address Overrides

TF Path: Tax Locator -> Address Overrides

The Address Override tool provides a utility to override as well as add new custom address information for tax location processing.

To Add a New Address Override

Select the Address Override icon from the main menu within TaxFactory.
Click the New ****on to add a new address override.

Enter the address override information into the fields, and then click OK. The new address override information is displayed in the box.

Note 1: Street Direction and Street Type are not required fields.
Note 2: Address overrides must use the same format as the United States

Postal Service address data format. In particular, street type must be in abbreviated form (such as ST for STREET) while the street name must not contain abbreviations. An input address will only match against an override of this form.

Note 3: TaxLocator does not support P.O.Box and Rural Route addresses

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Specify level of messages to be returned
Use: In this activity, you control the level of messages returned by BSI TaxLocator.

Activities
Set the value of the constant TXEST (BSI: Employee status parameter) to one of the following values:
0 for diagnostics and initial install. All messages shown: Information, Assumptions, Legalities, Failures and Fatal system errors
3 or higher for live runs. Only Failures and Fatal system errors shown.


Refer to BSI TaxLocator documentation for all the values and their meanings. To access this documentation, go to www.bsi.com.