Tax codes, tax groups, and posting definitions FAQ

This topic answers frequently asked questions about tax and posting definitions.

This topic describes functionality that is available only if the Payroll - USA configuration key is selected.

Can I mass-update tax codes?

Yes, you can update all the tax codes in a tax group at the same time. The financial information for each tax code is set up separately for each legal entity. If you change the values for one legal entity, the values for other legal entities aren’t affected. When you update a tax code by using the mass-update functionality, the changes are effective immediately. To make date-effective changes to a tax code, use the Maintain versions button on the Tax codes page.

Can I mass-create tax groups?

Yes. When you set up Payroll, you automatically create a set of system-defined tax groups the first time that you click the Update tax data link on the Payroll area page. Each system-defined tax group contains tax codes of a particular type. For example, all tax codes for school districts are included in the SCHL tax group, and all tax codes for state income tax are included in the SIT tax group. These tax groups are updated every time that you run the Update tax data process. You can manually create additional tax groups. For more information, see Tax information tasks.

Why are some tax codes not posted according to the posting definition that is associated with their tax group?

There are two possible reasons for this behavior:

  • The Employer tax option for the tax code on the Tax codes page is incorrect for the line type on the Transaction posting definitions page. If some tax codes in a tax group have the correct employer tax setting for the line type, but other tax codes in the tax group don’t have the correct setting, the tax codes that have the correct setting use the posting definition for the tax group. The other tax codes use the posting definition that is specified for the All code for their line type. The following table shows the correct relationships of line types and employer tax settings.

    Line type Required setting for the Employer tax option
    Tax - contribution Selected
    Tax - deduction Cleared
  • On the Transaction posting definitions page, the tax code is entered on a line that uses the Table code. Table lines take precedence over group lines. The following table shows that value that you can enter in the Payroll code field, based on the value that is entered in the Code field. It also shows the result that each combination of a code and a payroll code produces.

    Code Payroll code Result
    Table A tax code The tax code uses the specified transaction posting definition, even if the tax code is in a tax group that uses a different posting definition.
    Group A tax group All tax codes in the tax group use the specified transaction posting definition, except any tax codes that are on a table line.
    All [Blank] Any tax code that isn't posted according to a table line or a group line uses the transaction posting definition that is specified for All.

Why can't I delete a tax group?

You can’t delete a tax group that is system-defined, or that is enabled for posting definitions.

Why can't I remove a tax code from a tax group?

You can’t remove a tax code from a system-defined tax group.

Why can't I select Group in the Code field? The only options that I see are Table and All.

On the Transaction posting definitions page, the Group option is available only for the Tax - contribution and Tax - deduction line types.

Can I delete a tax code from a tax group that is enabled for posting definitions?

Yes. On the Tax codes page, clear the Enable posting definitions option, delete the tax code, and then select the option again.

Can I disable posting definitions for a tax group?

Yes, but you can’t disable posting definitions for a tax group that is used in a transaction posting definition. If you open the Transaction posting definitions page and delete the line that uses the tax group, you can then clear the Enable posting definitions option on the Tax codes page.

Why can a tax code belong to only one tax group that is enabled for posting definitions?

A tax code can belong to only one tax group that is enabled for posting definitions, because this restriction helps guarantee that the tax is posted to the correct account. If a tax code were included in two groups, the system would use the posting definition for the group that was processed first. For example, you could include the Colorado state income tax in both the state income tax group and the Colorado tax group. If both groups were enabled for posting definitions, the system would not consistently use the same posting definition for the Colorado state income tax. Sometimes, the tax might be posted by using the posting definition for the state income tax group. At other times, the tax might by posted by using the posting definition for the Colorado tax group. You would never know which posting definition was used.

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