Extended Tax Withholding - Vendor Master

[Former Member]

Experts!

for extended Tax Withholding in US, when Setting State tax withholding, we have created ST as tax type. We also have Tax Codes to apply the calculation.

Do we need more than one tax type to add to vendor master if vendor works in multiple states? In one of the sessions I read that we can leave the tax code blank in vendor master and system can retrieve the right tax code!

Is that possible? How is the right tax code is assigned based on the actual state that the work is rendered.

Thank you for your help!

[Former Member · Accepted solution]

You can also find more detial and configuration of [withholding tax|www.sap-exp.com] on [SAP Tutorial website|www.sap-exp.com]

Hope it will be helpful for you

[JavedKamal]

Hi Good morning Haddad,

Yes you are right, you have to add the tax type and check the liable check box in vendor master record for those states in which he is rendering. At the time of vendor invoice posting you can select appropriate withholding tax code & base amount in withholding tax tab e.g. if you received Gross invoice of USD 400,000 and this invoice belongs to four different state, in this case you just need to pick four different tax code & their base amount as per invoice. At the time of payment system will calculate withholding tax for each state as you entered in invoice.

You can also default the withholding tax type & code for which you are sure. If you entered the four tax type & code in vendor master record and four are liable. In this case if you post the invoice then you have to just tell the base amount for these tax codes, if you donu2019t then system will calculate the withholding tax on gross amount in each of four cases.

Than you

Javed

[Former Member]

Thank you for your prompt response.

Vendor Master does not allow me to enter Tax Type twice - ST. For example if CA has 7% tax withholding and NM has 5.3% tax withholding, I am unable to enter ST twice for the different tax code per state. Any idea how can I default the correct tax code based on state where services were rendered automatically?

[JavedKamal]

You need to have configured separate tax type for its correspondence tax code. This will also help out for tax reporting & queries.

I hope this will solve your problem.

Than you,

Javed

[Former Member]

Now that we have multiple tax types, for DME US_1099 reporting the participating code is being derivered from the state of vendor master record.

How do I link the participating code on report from the state where the service was rendered. Participating code in configuration is linked with state and is not linked with tax types/tax codes. Any idea?

Thanks again!

[Former Member]

Hi

In general, if different rates are applicable then as many tax codes linked to tax types would have to be assigned under withholding tax tab.

If WHT code is left blank with liability check, then at the time of down payment request or payment, system would automatically pop up WHT screen for the user to select the code, in case WHT to be deducted

Thank You,

[Former Member]

System does not allow you to enter multiple records for each tax code in vendor master? Is there any setting that demands tax type to be entered only once even if tax code is difference for each line?

Thank you!