Tax authority: A Tax Authority is a legal jurisdiction which imposes payroll taxes. In SAP, this is a 4-char code (TAXAU).
For US Payroll, the Tax Authorities are assigned a Tax Level.
Tax Level | Description | Example |
A | Federal | FED |
B | State | MS |
C | County | KY11 |
D | City | CA02 |
E | School District | PB2X |
F | Other | OR06 |
This configuration is done in table T5UTZ. Each tax authority is assigned to a tax level.
Tax Type: These are different categories of tax that is levied upon an employee or employer by a tax authority. These categories represent calculation formulas that are used by the BSI tax calculation engine, which calculates taxes for the US Payroll. Ex. Employee Medicare Tax and Withholding Tax. Tax types are configured in table T5UTT.
Tax Area: It is one or more Tax Authorities grouped together.
Tax Areas are nesting of Tax Authorities to which an employee is liable for taxes.
There are two types of Tax Areas: Resident Tax Area (where employee lives) and Work Tax Area (where employee works).
- Table T5UTA has all Residence Tax Areas. Grouping of Tax authorities based with Residence tax area is stored in T5UTR.
In above screenshot, you can see IN17 is Tax area that has 3 Tax authorities assigned to it – IN, IN17 and FED
- Table T5UTB has all Work Tax Areas. Grouping of Tax authorities based with Residence tax area is stored in T5UTW.
Now let’s talk about custom requirements where we may have to get the taxes from BSI (Business Software Inc.). Tax calculation for US payroll on any SAP system is done by BSI TaxFactory. SAP has given standard integration from SAP Payroll system (on-premise or cloud) to BSI to get the tax rates during payroll run. To get Supplemental and local tax rates from BSI and store in a custom table requires custom development which is explained below.
You can search for standard classes available for BSI by searching for CL*BSI* in transaction SE24. The class highlighted below can be leveraged to build the code to extract tax rates from BSI. 3 Steps at high level are explained further.
Step 1: Create an interface as shown below.
Step 2: Build io_input to pass to BSI.
Create data type reference to lcl_bsi as shown below.
Sample code attached to declare this class and methods.
Internal table gti_taxes has to be built using table T5UTI that has al Tax authorities and Tax types.
Step 3: Call the method.
Step 4: Tax rates will be returned in structure lo_output_data.
The attribute tax_rate will give you tax rate for each Tax authority and tax type.
You can also give Tax authority and Tax type as parameters on selection screen of your custom program to extract Tax rates from BSI.
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