Incorrect State withholding tax with Supplemental payment type

[mausumi_ray]

Hi,

We are not getting correct tax rates for withholding tax for some residence and work state combinations when processing any supplemental wage, bonus for example, < ( wage types where the processing class 68 has been maintained as 2).

For example, if an employee has residence state as VA in inforype 0207 and work state has NY in infotype 0208; when we run payroll with a bonus wage type, VA withholding tax comes as zero. VA tax shows correct value for the regular wages though for the same employee. Same thing happens for residence state AL and work state NY as well. AL withholding tax comes out as zero for supplemental payment types.

I am not sure but this might have something to do with reciprocity. Because if I run payroll for an employee with residence state as VA and work state as DC, then the VA tac gets calculated correctly for supplemental payment and DC tax becomes zero - which I am assuming is correct based on reciprocity rule for DC.

This happens for lot of other residence and work states as well with supplemental payment processing - either the tax is zero or less than expected.

Are we missing some setting in configuration? SAP and BSI experts: please advice.

Thank you!

Thanks,

Mausumi

[BalaAP]

Hi,

1) If this happens first time, then it could be advisable to check the following blog related to bsi 11 upgrade process (even though it is bit old, but we might have missed newly added tax states, like any new acquisition by our company in the new state, which was not tested during bsi 11 migration):

https://blogs.sap.com/2019/10/14/taxfactory-11.0/

Lot of discussions and sap notes were present in the above blog related to reciprocity.

2) If you have successfully tested reciprocity scenarios earlier and now your are facing this issue, then you may have to trace the recent changes in BSI & SAP tax config and identify the reason for this.