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more than you ever wanted to know about SAP Payroll taxes
SAP Tax Terminology................................................................................................................................................ 1
Tax Calculation Process........................................................................................................................................... 2
Process Overview............................................................................................................................................. 2
Data Model............................................................................................................................................................... 3
Infotypes........................................................................................................................................................... 3
Configuration of Taxes.............................................................................................................................................. 9
IMG Implementation Guide Steps.................................................................................................................. 9
Tax Companies............................................................................................................................................... 10
Load Tax Data................................................................................................................................................. 12
Tax Data Maintenance Tax Authorities......................................................................................................... 13
Tax Data Maintenance Tax Types................................................................................................................ 16
Tax Data Maintenance Tax Areas................................................................................................................. 17
Tax Data Maintenance Tax Models.............................................................................................................. 20
Useful Reports................................................................................................................................................ 25
Tax Data Maintenance Unemployment Insurance.......................................................................................26
Tax Data Maintenance Tax Overrides.......................................................................................................... 26
Tax Data Maintenance Symbolic Account Split............................................................................................ 27
Priority of Tax Wagetypes............................................................................................................................... 27
Tax Wagetypes....................................................................................................................................................... 28
Descriptions of tax wagetypes........................................................................................................................ 28
Linking tax wagetypes to other tax data.......................................................................................................... 29
Gross to Net Wagetypes......................................................................................................................................... 31
Gross-Ups.............................................................................................................................................................. 32
Cash or Regular Gross-ups............................................................................................................................ 32
No-pay Gross-ups........................................................................................................................................... 35
Problems with Gross-ups................................................................................................................................ 36
Reconciling Taxable Wages No Retrocalculation................................................................................................. 37
Retrocalculations.................................................................................................................................................... 38
Cash vs Tax Perspective................................................................................................................................. 38
Gross to Net Equation..................................................................................................................................... 38
Forming Retro Differences.............................................................................................................................. 38
Claims............................................................................................................................................................. 39
Taxation of Retrocalculations.................................................................................................................................. 41
Tax When Paid (TWP) vs Tax When Earned (TWE).......................................................................................41
Balanced & Unbalanced Offsets..................................................................................................................... 41
Tax Priority & Caps......................................................................................................................................... 41
Retroactive changes to gross-ups.................................................................................................................. 42
Crossing Years................................................................................................................................................ 43
W-2 Corrections (W-2C)................................................................................................................................. 45
SAP Term
Definition
Tax Company
Tax
Tax Type
Formula
Formula
Wage Base
Tax Model
Page
Other
Infotypes
Year-to-Date
Payroll
Previous
Payroll
BSI Tax
Calculation
BSI Tax
Formulas
Payroll Results
(RT, TCRT, TAX, TAXR, XDFRT,
UNB, BAL)
Page
Title
Description / Notes
207
Resident Tax
This is the tax area where the employee lives. They can only live in one place at a time,
and payroll reads this infotype as of the check date.
Page
Title
Description / Notes
Infotype
Title
Description / Notes
208
Work Tax
This infotype stores the various tax areas the employee works in they can work in
multiple areas at once, and each is pro-rated by a certain %. The total % can not be
more than 100. If it is less than 100, the remainder is allocated to the resident tax area.
Payroll reads all the infotype 208s active during the pay period and pro-rates wages
according to each infotype 208 occurrence.
Page
Title
Description / Notes
209
Unemployment State This infotype contains the state and worksite the employee is taxed in for unemployment
taxes. For payroll calculations it is read as of the period-end date. If the worksite is filled
in then you can use SAPs Multiple Worksite Reports in Tax Reporter.
Page
Title
Description / Notes
210
Withholding Info
This infotype stores the W-4 or state-equivalent information needed for calculating
withholding taxes. It is read as of the check date. Various tax authorities use different
fields on this infotype, and the available fields change depending on the tax authority
entered (which is also the subtype).
Page
Title
Description / Notes
234
Tax Overrides
This infotype contains various overrides for calculating withholding taxes, and is read as
of the check date.
Supplemental
method: Many
withholding taxes
have an optional flatrate method that can
be used. Some have
more than one
supplemental
method here we
can override the
supplemental
method for an
employees
paychecks.
Override amount:
This amount will
override any
withholding tax
amount calculated by
the system.
Empl. Override
group: This is a code
created in BSI that
defines a custom tax
calculation, such as
a custom flat-rate for
certain bonus
payments. The
override group has to
be created in BSI
and then applied
here.
Page
Title
Description / Notes
235
Other Taxes
This infotype contains overrides for all other taxes than withholding, and is read into
payroll as of the period-end date.
Page
To get more documentation, double-click on a lines text. For example, double-click on the Tax text line and you get
this documentation:
Page 10
Tax Companies
This is the step where Tax Companies are defined and then assigned to each personnel area/subarea combination.
The tax company is not the same as the Company Code (or accounting company) that is seen on infotype 1. In
fact, Tax Company does not display on infotype 1. The information entered in the Define tax companies (table
t5utl) step is used for regulatory tax reporting (Tax Reporter). The screen below shows where Tax Company is
assigned to the personnel area/subarea (table t5u0p):
Page 11
The Tax Company is where taxes & taxable wages are reported for regulatory purposes. The accounting debits &
credits go to the Company Code on infotype 1, which may or may not correspond to the Tax Company. For
example, this screen shows that taxes and taxable wage are reported to the government under Overseas, and the
description on the personnel area says the accounting goes to Company Code 001.
Each tax company is identified by an employer ID number for every tax authority it reports to. Those employer ID
numbers (EINs) are entered in the Define tax identification numbers by BSI tax company step (t5uth), and then
assigned to a tax type within the tax authority in the Define federal/state/local employer ID number step (table
t5uti). SAP Payroll will not calculate a tax if the corresponding EIN does not exist in these tables.
Load Tax Data
This section is primarily for the first-time system setup, where we copy some data from the BSI Tax Calculation
system into SAP tables. It is normally maintained by periodic updates to the system that come from SAP.
Page 12
The Check tax authorities step (table t5utz) is used to configure certain options for each tax authority. This data is
delivered by SAP and normally it is also updated by them as new tax authorities come into existence. You might
want to customize some options here to tailor the system to your needs.
Page 13
The Sort no. controls the sequence in which the tax authorities will be displayed in select lists. The W4 indicator
controls whether of not you want to require an infotype 210 for the tax authority, make it optional, or not allow one to
exist. The IRS column is to indicate whther of not you want to apply the IRS 10-exemption limit rule to the authority.
The NoUS column is used to indicate US Territories & Possesions, such as Puerto Rico and the US Virgin Islands.
The next IMG steps - Check sort number for authority, Check W-4 and exemption limit indicators, and Check
status of territories are just different views on this same information.
Check tax authority mapping (table BTXTAXC) is where we map the SAP Tax Authority code to the BSI Tax
Authority code. This is normally maintained by SAP and does not require customer maintenance. BSI has its own
codes for each tax authority, but lets the customer create whatever codes they want to use. Those customerdefined codes are mapped to the BSI codes here.
Page 14
Each tax authority can have its own set of valid filing status codes, and these are controlled in the Define valid
filings statuses step (table t5utk). This data is generally maintained and updated by SAP.
Page 15
Check tax types (table t5utt) is a list of all valid tax types, and Maintain tax types per tax authority (table t5utd) is
where we define which tax types are valid for each authority.
Page 16
Page 17
The views for defining tax areas for work and resident locations are very similar. SAP delivers these tax areas with
the system, and updates them as new ones come into existence. The Maintain work-related tax areas (table t5utb)
is where we define valid tax areas for the work location.
Page 18
Resident tax areas are setup in a similar manner, but stored in table t5uta. Likewise, resident tax areas are stored
in table t5utr. Resident tax areas have additional functionality that enables the system to suggest a list of tax areas
that may be valid for the employee, based on the employees zip code. The Maintain zip code ranges per
residence tax area (table t5utf) specifies a range of zip codes for each tax authority. When a new infotype 207 is
created, the system will search this table with the employees zip code to get a list of tax areas that might be
appropriate for the employee. Although a zip code range exists for work tax areas, there is no other system
functionality to support that process (i.e it doesnt work).
Page 19
Page 20
The second step is Define taxability model, or table t5utm. In this table we link each taxable wagetype to a tax
model. There are four aspects to this link the resident, work and unemployment taxation of the wagetype, and the
taxation for different groups of employees (the tax modifier). The link to the wagetype is via processing class 71
called the taxability class. For each taxability class we specify if the wagetype is taxable for the tax authority an
employee lives in, works in, and for unemployment taxes. These three settings can be customized per tax modifier.
For example, we may tax wages for every tax authority for regular employees, but only tax wages for Federal for
expatriates. In that case, we put expatriates and regular employees in different tax modifiers, and control the
assignment of wagetypes to tax authorities via table t5utm.
Page 21
Employee Group
U1
U2
U3
US Expatriates
U4
U5
U6
Never used
U7
Page 22
Tax type combination: A code from t5uty that specifies which tax types the wagetype is taxable for
Page 23
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Employee tax
infotypes
(207, 208, 209)
Wagetype, processing
class 71
(t512w)
Taxability model
(t5utm)
Tax modifiers
(rule UMOT)
Taxable wagetypes
(/3xx)
Useful Reports
SAP has a standard program RPUTMDU0 (HR -> Payroll -> Americas -> USA -> Subsequent activities -> Period
independent -> Tools -> Tax utilities -> Expand tax models) that reads the tax model tables and shows which tax
types are used for each line of t5utm. There is also a standard report that displays all the tax authorities in the
system (Display tax authorities on the Tax Utilities menu, or program RPUAUTU1, or view table t5utz via
transaction se16).
Page 25
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Description
Explanation
Notes
/3xx
Taxable earnings
/6xx
Reportable wages
/7xx
Taxable wages
/4xx
Taxes
/Qxx
/Nxx
Uncollected taxes
/Ixx
Page 28
The two-digit number in the C1 column in the RT links us to the SS column in the TAX table. So when the C1 split
is 01, we know that wagetype is linked to tax authority FED. When C1 is 02, then the wagetype is linked to tax
authority OH.
Page 29
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Description
Explanation
/101
Total Gross
/110
Total EE
Deductions
/5U0
Total EE Taxes
/560
Net Pay
Notes
Page 31
Page 32
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Page 34
Page 35
Description
Amount
Notes
/101
Total gross
$60
/5U0
Total EE Tax
$60
/560
Net Pay
$0
270E
$100
No-pay net
270F
$160
270G
$60
Description
Amount
Notes
/101
Total gross
$60
/5U0
Total EE Tax
$0
/Nxx
Uncoll EE tax
$60
/560
Net Pay
$0
/561
Claim
$60
/563
Claim paid
$60
270E
$100
No-pay net
270F
$160
No-pay gross
270G
$60
The $60 in 270G was used to pay off the existing claim first, so
there was no money leftover to pay for taxes. Now the
employees taxes are not in balance with their wages.
Page 36
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Amount
Debit
Credit
/101
$1000
$1000
/110
$200
$300
/5U0
$300
$300
/560
$500
$500
Wagetype amounts can change retroactively. For example, if an employee was underpaid by 8 hours of overtime in
a previous period, the amount of the overtime wagetype would increase retroactively. Since overtime is a cash
payment, it would cause /101 to increase retroactively, showing that we now need to pay the employee $100 more
in this case. But, in a retrocalculated period we can not change the amount of net pay, since that pay was already
transferred to the bank (or paid via check). The difference between what was paid originally vs what should now be
paid is put into a wagetype called retro differences, or /551. This keeps the retro payroll period in balance (i.e.
debits equal credits).
Period 1 in 2
Wagetype
Amount
Debit
Credit
/101
$1100
$1100
/110
$200
$200
/5U0
$300
$300
/560
$500
$500
/551
$-100
$100
Page 38
Amount
Debit
Credit
/101
$1000
$1000
/110
$200
$200
/5U0
$310
$310
/560
$590
$590
/552
$100
$100
Claims
Retro differences (wagetype /552) is added to total net pay (wagetype /560) in the current period. If /552 is
negative, it could reduce /560 to a negative amount, which is not allowed (cant have negative net pay). The amount
it would go negative is the amount that can not be recovered in the current period, and that amount is stored in /561
a Claim. The claim is the amount of money the employee still owes the company because they dont have enough
to pay it back.
For example, assume the employee was really on leave of absence beginning in period 1, so they would have had
a total gross of zero, but they were originally paid $1000. In that case, the results would look like:
Period 1 in 2
Wagetype
Amount
Debit
Credit
/101
$0
$0
/110
$200
$200
/5U0
$300
$300
/560
$500
$500
/551
$1000
$1000
In period 2, the employee is still on leave of absence, so no payments, deductions or taxes are taken. The $1000
overpayment from period 1 in 2 is stored as a claim, since there is no net-pay to offset it.
Period 2 in 2
Wagetype
Amount
Debit
Credit
/101
$0
$0
/110
$0
$0
/5U0
$0
$0
Page 39
$0
$0
/552
$-1000
$1000
/561
$1000
$1000
The claim (/561) is the amount the employee owes the company. In every subsequent payroll the system will apply
money towards paying off the claim, before it uses the money for any deductions or taxes. For example, in period 3
the employee gets paid $600, and all of that gets allocated to reduce the claim.
Period 3 in 3
Wagetype
Amount
Debit
Credit
/101
$600
$600
/110
$0
$0
/5U0
$0
$0
/560
$0
$0
/561
$400
/563
$1000
$400
$1000
Page 40
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Description
Amount
Notes
/101
Total gross
$1000
/5U0
Total EE Tax
$1000
/560
Net Pay
$0
270E
$20000
No-pay net
270F
$21000
No-pay gross
270G
$1000
Description
Amount
Notes
/101
Total gross
$1500
/5U0
Total EE Tax
$1000
/Nxx
Uncoll Tax
$500
/551
Retro differences
$-500
/560
Net Pay
$0
270E
$30000
No-pay net
270F
$31500
No-pay gross
270G
$1500
Page 42
Description
Amount
Notes
/101
Total gross
$0
/5U0
Total EE Tax
$0
/552
Retro differences
$500
/560
Net Pay
$500
To minimize the problems with retroactive changes to gross-ups affecting net pay or creating claims, we wrote a
new payroll function ($RGUF) that tricks the system so that if gross-ups change retroactively it always has enough
money to cover taxes, so no retro differences are created. The example listed above should not happen in Client
XXX system because of this enhancement.
Crossing Years
When a payroll retro crosses from the current year into a previous year then special processing takes place for
taxes. SAP will not allow taxes in the previous year to change from their original values. For example, if you
process a January correction check that retros back into the previous year and something causes taxes to change,
SAP will reset those tax amounts back to their original value. This is done by the payroll function UOTX0 keep old
taxes in retro. This exception to this function is that it does let you change tax amounts via NAMCs (infotype 221).
In this example, well show what happens when a no-pay gross-up changes retroactively in the previous year. In the
original period 12 a no-pay gross-up of $30,000 was processed:
Period 12 in 12
Wagetype
Description
Amount
Notes
/101
Total gross
$1500
/5U0
Total EE Tax
$1500
/560
Net Pay
$0
270E
$30000
No-pay net
270F
$31500
No-pay gross
270G
$1500
Page 43
Description
Amount
Notes
/101
Total gross
$1000
/5U0
Total EE Tax
$1500
/551
Retro differences
$500
/560
Net Pay
$0
270E
$20000
No-pay net
270F
$21000
No-pay gross
270G
$1000
In period 1, the employee had no other pay, and they receive a claim for the difference in tax from period 12 in 12
and 12 in 1. The employee owes $500 because we reduced their tax payment but did not reduce their actual taxes
in period 12 in 1.
Period 1 in 1
Wagetype
Description
Amount
/101
Total gross
$0
/5U0
Total EE Tax
$0
/552
Retro differences
$-500
/560
Net Pay
$0
/561
Claim
$500
Notes
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