BSI Tax Factory 10.0 enhancements & SAP Configuration activities
We have recently finished our upgrade of BSI tax factory 10.0 and the aim of this document is to share our learnings, findings and provide a brief overview of the activities that needs to be performed in SAP side for activating the new/changed functionalities supported by BSI
At the start of the document in section 1 we have noted the changes in terms of functionality for US taxation in BSI tax factory 10.0 and then later in section 2 we have provided a step wise instruction to complete these configuration activities in SAP side.
Section 1:- Major changes as compare to BSI tax factory 9.0
- With tax factory 10.0 BSI has come up with a web based client interface (Apache Tomcat version 6.0 based) this will replace the older GUI which needs to be installed in each desktop or laptop from where you were intended to access the BSI tax factory. Please check the pre-requisites on system requirements from the BSI website under Technical documentation.
- With BSI tax factory 10.0 BSI has provided an option to pass the quarterly gross income through SAP BSI interface. This feature was not there in BSI tax factory 9.0; it is particularly useful for calculation of some locality based taxes like NY locals which are dependent on a threshold value of quarterly gross income. We have talked about this feature in detail under the section 2.0 “Configuration activities”
- With BSI tax factory 10.0 BSI has also done the implementation of exemptions based on an employee's age. This includes Ohio and other state's localities. “Employees who turn age eighteen (18) at any time during the current calendar year are subject to the tax only after their birth date”
- In BSI tax factory 10.0 BSI has changed the way it was handling the courtesy withholding functionality. In earlier versions this functionality was on by default but going forward in version 10.0 it has been put as off by default . SAP has also enhanced the solution in US payroll space and we can specify to switch on the courtesy withholding at tax company/tax authority level and as an exception at employee level also using the residence tax area info type. This functionality has been detailed in section 2.0 “Configuration activities”
- With BSI tax factory 10.0 BSI has provided an option to differentiate between active regular employees and deceased employees to follow different tax calculations on deceased employees final pay check. This has also been detailed in section 2.0 “Configuration activities”
- With BSI tax factory 10.0, SAP has changed the way we used to apply the TUB’s in SAP side. SAP has released a new toll called “TUB Workbench”, which not only automates the process of applying the tubs but also simplifies it by giving opportunity to create customizing as well as workbench transports using a single interface.
SAP has suggested using this tool once you are on TUB level 17 in BSI tax factory 10.0. During our project we initially use this new tool but later on we discovered that there are still some issues in the new tool and SAP is working on to fine tune the new tool hence we switched to the old method of applying the tub.
SAP has informed that they will continue to support the traditional way of applying the TUB’s till April 2015. After that all customer will have to shift to the TUB workbench
Section 2: Configuration steps from SAP side
- Specify BSI tax factory version : Similar to tax factory 9.0 in tax factory 10.0 also we need to specify the version of tax factory to which US payroll driver will be passing on the information for calculation of tax components. IMG node for doing the same is
SPRO -> PAYROLL -> PAYROLL USA-> TAX->SAP/BSI Interface->Specify BSI Tax Factory version for customizing settings
For using the tax factory version 10.0, please specify the value for option “BSITF” as “V10”.
As at any point in time only one version of the BSI tax factory 10.0 can be live in the system hence start date in this customizing activity does not matter much. Just to avoid any confusion I will advise to use the start date as 01/01/2014 or the date from which you are going live with BSI Tax factory version 10.0.
2. BSI tax factory version in payroll driver: Update the UPARI function call in the standard subschema UTX0 or custom subschema which is used for tax calculation Similar to tax factory 9.0 parameter 1 needs to be specified as “BSI” Unlike earlier tax factory versions, where second parameter was specified as “XX”, depicting the version of tax factory like 80, 90. In tax factory 10.0 second parameter needs to be specified as “VER”
3. In BSI tax factory 10.0 some data as mentioned below needs to be reported differently. SAP has provided following steps to incorporate these changes
- Personal Data treatment: In BSI tax factory version 10.0 customers can control how the personal data, comprising of “Employee Number” and “Employee Name” is send to the BSI tax factory 10.0 and how it is displayed in the payroll log under BSI Interface.
IMG Path for doing this is
SPRO-->PAYROLL-->PAYROLL USA-->TAX-->SAP/BSI Interfaceà Specify personal data treatment
Execute this Customizing activity and define the value of the BSIPD configuration option by making the corresponding entry in table view V_T599K2 according to the needs of your company. The possible values are as follows:
- 'NOTSEND': Personal data is neither sent in the remote function call to the BSI TaxFactory API, nor displayed in the BSI interface payroll log.
- 'ONLYLOG': Personal data is not sent in the remote function call to the BSI TaxFactory API, but it is displayed in the BSI interface payroll log.
- 'SEND': Personal data is sent in the remote function call to the BSI TaxFactory API, and it is displayed in the BSI interface payroll log.
As per the screen shot mentioned above, we have opted for the option ‘SEND’. With this option, we can see that the employee’s name and personnel number is displayed in the BSI Interface
B. Employee Type Indicator & Date of Death: With BSI tax factory 10.0 BSI has provided an option to differentiate between active regular employees and deceased employees to follow different tax calculations on deceased employees final pay check.
The system reports the employee type indicator on BSI interface (parameter ‘EP’ line EPC).If employee is dead then system also reports the date of death (Parameter ‘DT’ line EPC).
The possible values for the Employee Type Indicator field are as follows:
0: Active Regular Employee
1: Non-Resident Threshold Employee
4: Deceased Employee in the Private Sector
5: Deceased Railroad Employee
6: Deceased Employee in the Public Sector
SAP has introduced a new feature 10EET for passing on this information. Feature 10EET is not setup be default, it can be set up using following decision fields depending on the requirement of client.
- TXCMP Tax company
- BEGDA Start Date. This is the start date of the Actions (0000) info type record.
- MASSN Action Type
- MASSG Reason for Action
- WERKS Personnel Area
- PERSG Employee Group
- PERSK Employee Subgroup
- STAT1 Customer-Specific Status
Processing Logic for feature 10EET: This feature processes the each record of info type 000 “Action” and its corresponding record from info type 0001 “Organization Assignment”. And depending on the decision fields defined as per the client’s requirement, it returns the one digit EEID. And if the returned employee type is 4,5 or 6 (Which corresponds to the deceased employees), the system also reports the value of the Start Date (BEGDA) of the corresponding record of IT0000 (date of death).
If the employee type indicator returned by the feature is different from 4, 5, or 6 (employee is not deceased), parameter 'DT:' is filled in with zeroes.
C. Estimated Quarterly gross wages: As of BSI tax factory version 10.0, employers are required to report their prior quarter’s total gross wages per tax company/tax authority/tax type. This information is basically used to calculate all those kinds of taxes which are based on threshold of quarterly gross wages like payroll expense tax for several NY locals
SAP has not added an IMG node for doing this activity yet. Hence follow the steps mentioned below for maintaining this information
- Run transaction SM30.
- Edit view V_T5UX9_ADDINFO.
- In the Country Grouping field, enter '10'.
- Leave the Tax form class field blank.
- In the Type of information field, enter '10'.
- Choose Continue.
- Make the required entries.
As mentioned above this information is used by BSI for calculating certain tax types for some authorities like NY locals who are dependent on threshold wages.
We have maintained this information for tax type 19 for NY locals, if we skip this activity then this information will not pass to BSI and BSI will not return the calculated tax for these tax types. Listed below are the few key points for calculation of tax type 19
- The quarterly gross wages needs to be maintained for each NY local where this tax is applicable
- The quarterly gross wages are at the employer level not specific to the NY local
- nformation can be maintained with an end date of 12/31/9999. And review the information at the start of each quarter for the previous quarter
Listed below is a screen shot for the information that we maintained for our client
4. Courtesy Withholding: One of the major changes from a functionality perspective in BSI tax factory version 10.0 is the way BSI handles the courtesy withholding tax.
What is courtesy withholding: In cases where employees reside in one tax authority and work in other tax authorities, they are required to pay taxes applicable to their residing state/local tax authority also. Employers are not legally bound to deduct these taxes applicable to state/local tax authority it’s the responsibility of employee to make these taxes deposited to the corresponding state/local tax authorities. This puts an additional burden on employee to keep a check on their state/local taxes to be withheld and make sure to get it deposited as per the time lines defined by the state/local tax authorities. Employers extend the facility to calculate and deduct these local taxes and subsequently deposit them to the relevant tax authority. This withholding of the state/ local taxes by employers for their employees is called courtesy withholding by employer.
In earlier version of BSI tax factory this courtesy withholding was set to ‘ON’ as a default configuration settings. But in tax factory 10.0 as a default BSI has set this functionality to off and depending on the information passed on by SAP in BSI interface decides whether to calculate the courtesy withholding or not.
SAP handling of courtesy withholding: SAP has also enhance the setting up of courtesy withholding by providing an option to users by which we can set up the courtesy withholding settings at tax company/tax authority level and as an exception it can also be defined at each employee level in info type 0207 “Residence Tax Area”
For each employee and each payroll run, the system reads the following to identify whether Courtesy Withholding is allowed or not:
- Settings made in the employee's Residence Tax Area (0207) infotype, in the Courtesy withholding (P10_COURTESY_WH) field.
- If none exist: Settings made at Tax Authority level.
- If none exist: BSI default option.
How to set up courtesy withholding at tax company/tax authority level:-As described above we can set up the courtesy withholding at tax company/tax authority level. Use the following IMG path for making these settings
SPRO-->PAYROLL-->PAYROLL USA-->TAX--> Tax Data Maintenance--> Tax Areas--> Courtesy Withholding--> Maintain courtesy withholding
Step 1:- System will open the following window. Enter the country grouping as 10 and click on continue.
Step 2:-Click on new entries and make entries in the following fields
A) Tax Company
B) Tax authority
C) Choose one of the following options for courtesy withholding
- Use BSI Configuration: Uses the default BSI configuration, which is set to off for courtesy withholding
- Allowed: By using this option we are setting the courtesy withholding to in for the tax authority mentioned
- Not allowed: This will again set the courtesy withholding to off
FAQ:
If we do not make any entry in this table then system uses the default BSI configuration which has set the courtesy withholding to off
2. When reading the settings defined for courtesy withholding system first checks that has any settings been defined for the tax authority at lower level, if not then it goes one level up and check the settings at higher level. Say an employee is living in tax authority OH3C”Aurora”,first system will check that is there any setting for OH3C, if yes then system will use those settings, if not then system will check is there any setting for OH “Ohio” if yes then system will use those settings, if not then system will go with default settings
Enabling courtesy withholding override in info type 0207 “Residence Tax area”:- By this enhancement SAP has made it possible for the user to override the courtesy withholding settings for individual employees who live and work in different states.
After performing these customizing activities, a new field is displayed in the Residence Tax Area (0207) infotype. This field is called courtesy withholding (P10_COURTESY_WH). By means of this field the user can enable or disable courtesy withholding at employee level. The possible values for the Courtesy withholding field are as follows:
- Blank: This is the default value and means the following:
The system reads the settings defined in Customizing activity Maintain courtesy withholding. If no settings are made in that activity, the system uses the BSI default.
- 1 - Allowed: If the user enters this value, the withholding tax is calculated, that is, the system applies courtesy withholding. This option is valid only as of BSI TaxFactory 10.0.
- 2 - Not allowed: If the user enters this value, the withholding tax is not calculated, that is, the system does not apply courtesy withholding. This option is valid only for BSI TaxFactory 9.0.
The IMG node for enabling courtesy withholding override in infotype 0207 “Residence tax area” is
- SPRO-->PAYROLL-->PAYROLL USA-->TAXà Tax Data Maintenance-->Tax Areas-->Allow disabling of courtesy withholding in infotype 0207
1) Go to Define HR Attribute Groups and choose “New entries”
2) Insert the new group as shown below
- HR Attribute Group: make an entry, for example, GR_CW
- HR Attribute Group Description: make an entry, for example, Courtesy Withholding
- HR Attribute: CL_STATE
- Customizable Value of HR Attribute: make an entry for the state for which you want to enable the courtesy withholding field in info type 0207 “Residence Tax Area” for example NY
Save your entries.
3) On the Define HR Attributes Groups screen, select the group (in the example above, GR_CA) and go to Define HR Attribute Values
4) Insert the new attribute as shown below:
HR Attribute: AT_COURTESY_WH
Start Date: 1800-01-01
End Date: 9999-12-31
Customizable Value of HR Attribute: X
5) Choose Activate
After you execute the steps described above, for those employees who live in NY the Courtesy withholding (P10_COURTESY_WH) field is displayed in the Residence Tax Area (0207) infotype. The default value of the field is blank. The user must manually change the value of the field to '1 - Allowed' or '2 - Not allowed' to change the system behavior if required, depending on the version of BSI Tax Factory that is installed.
References
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