Learn more

About Local/Other Tax Codes

About Federal and State Tax Codes

Setting Up a Custom Tax

About the Update Local Taxes Audit Report

Setting Up a Local Tax

Overview

The Local Tax Codes setup process is used to add a tax for a specific locality (other than Federal or State taxes) and that is supplied and maintained by Sage HRMS Payroll with the quarterly legislative updates. 

After you add the tax, you can use it in your Sage HRMS Payroll system. For example, you can assign the tax to an employee or use the tax when setting up an earning/deduction.

Before you start

  • Make sure you understand the impact the tax settings have on payroll processing.
  • Using the Earning/Deduction Codes window, define the earnings/deductions used to calculate your employees’ pay.
  • Determine the local or other custom taxes you need, and the types of information you need to track and report in each.
  • Consider the levels of your taxes.
  • Determine the G/L account numbers to which you want tax amounts to post.

If you are using cost center overrides, you may want to set up base distribution accounts at the tax level since you will be overriding one or more of the distribution account’s segments with employee-specific segments. (If you use cost center overrides, tax amounts are distributed to the cost centers in which the taxable wages were earned unless you set the Use Cost Center Overrides For These Accounts option to None on the Payroll G/L Integration setup window.) A base distribution account has a valid account segment but may use zeros or some other number for the segments that will be overridden on an employee-by-employee basis.

Be sure that the G/L segment codes and accounts, including any base accounts, to which tax totals will post have been added in General Ledger.

To set up a local tax for your company

  1. Open Payroll > Payroll Setup > Local/Other Tax Codes.
  2. Click the Select Local Tax button. All taxes in your system display.
  3. Highlight the local tax to add to your company and click Select.
  4. Verify the information for the tax and on the G/L Dist tab, add a G/L Distribution Code.
  5. Click Add.
  6. Click Save.

Install the Tax Repository and Update Taxes

The Install Repository button restores the latest available compliance data in your system. The repository contains the compliance data for local taxes. Selecting this option will not affect current company tax codes you have in your system, unless you choose to update your local tax codes. You can reinstall the repository multiple times.

Note: Note: You require the appropriate security access rights to update local taxes and employee details.

To update a company tax code with data from the repository, you can do one of the following:

  • Update local tax codes individually.

    Select the tax code in the tax finder and then click the Update button. The Update button is not enabled for custom taxes that you create.

  • Update all local tax codes automatically.
    •  After installing the repository, when prompted "Do you want to continue updating the company local tax records with information from the local tax repository?", click Yes. The company-level local taxes are then updated.
    • You are then prompted to update the employee-level local taxes. When prompted "Do you want to continue updating employee local tax records from the local tax repository?" click Yes .

After setting up a tax

  • Print a listing of taxes you set up, to verify that they are correct and complete:
    • On the File menu of the window, choose Print, or
    • From the Payroll Setup Reports folder, choose Tax Profiles.
  • Print the company-level and employee-level Update Local Taxes Audit reports and verify the changes.