Oracle Payroll and HR only users must maintain the tax-related information each employee provides on form W-4 Employee's Withholding Allowance Certificate, as well as certain additional tax information for employees. The payroll run uses this information to determine employee tax withholding at the Federal, state, and local levels.
To review and maintain employee tax information, use the Federal, State, County, City, and sometimes Percent Tax Rules windows. Entries to these windows are date effective.
You can enable the Address Validation Using Vertex Web Services feature to automatically validate addresses for taxation purposes. See: Address Validation Using Vertex Web Services.
When you hire a new employee, you must enter a primary residence address for them. Each new employee must also have a work location with an address that includes a city or town and a state. The work location is the location of the organization included in the employee assignment.
Note: This assignment may be the default assignment of the employee either to the Business Group or to the organization to which he or she was an applicant, or may be another assignment entered as a correction to the default assignment.
The system date-effectively creates default Federal, state, and local tax records for each new hire, using:
The employee's primary residence address to determine their state, county, and city or town of residence
The location of the organization included in the employee's assignment to determine their work state,, SUI state, county, and city or town
The filing status of these default tax records is Single, and the default for the number of allowances is Zero. If a new employee's W-4 form contains different information from that of the default records, enter this information using the Federal Tax Rules window.
Note: Oracle Payroll does not automatically create default tax records when the Location Address changes, the Payroll Tax City, State, Zip and County override location address fields are used, or when the Taxation Location override on the GREs and Other Data window changes.
Note: If you change the Location Address or the Payroll Tax City, State, Zip and County fields for the location, you must run the Update Work Location Tax Records concurrent program. This program creates default tax records and provide a report of all employees affected by the change. You then must update the individual tax records affected by the change and modify the SUI State's withholding information and percentage tax rules, as required. If you skip this step, payroll taxes will be incorrect for future payrolls until the appropriate change is made.
Note: If you make a change to the SUI state, Oracle Payroll automatically populates the SUI Base Override field with the remaining amount of taxable wages to the limit for the new state. However, an employer can manually override the data in this field. The system issues a warning that based on the limit, the amount entered is not correct.
Tax Record Changes for Current Employees
Scenario 1Whenever changes occur to the city, county, or state of the current primary address for an employee, the system checks the employee's tax records and date effectively and makes changes to the local or state and local tax records, as required.
For example, when you change the primary address to a new state, county and city, Oracle Payroll creates default tax records for the new state and locality, with 0% as the time worked in the new state and locality.
Depending on the rule you entered for the state in the State Tax Rules window, the filing status and number of allowances for the new state and local records either defaults from those on the employee's Federal tax record or go in as Single and Zero.
Scenario 2Whenever the city, county, or state of a location address changes, or the Payroll Tax City, State, Zip, and County fields for the location changes, you must run the Update Work Location Tax Records concurrent program. This program creates the default tax records, and provides a report of all employees affected by the change. You must access the individual tax records effected and modify the SUI state withholding information and percentages, if required.
Note: If you skip this step, payroll taxes will be incorrect for future payrolls until the appropriate change is made.
For example, when you change the Location address or Payroll Tax fields to a new state, county and city and then run the Update Work Location Tax Records concurrent program:
Oracle Payroll creates default tax records for the new state and locality, with 0% as the time worked in the new state and locality.
Depending on the rule entered for the state in the State Tax Rules window, the filing status and number of allowances for the new state and local records either defaults from those on the employee's federal tax record, or go in as Single and Zero.
Time worked in all other states and localities remain the same.
Oracle Payroll does not update the employee's SUI state.
If the employee is working 100% of the time in the new state and/or locality, or is not working 100% of the time in the new state and/or locality but is working elsewhere for some percentage of time, you must access the individual tax records effected and modify the percentages and withholding information percentages, as required.
Scenario 3Whenever you update the Taxation Location override field is on the GRE and Other Data window (on the Assignment form), Oracle Payroll does not update employee tax records to reflect the Taxation Location override. You must create individual tax records for the new state and locality, and then modify the withholding information and percentages, if required. If you don't, the employee will be taxed improperly the next time you run payroll, because Oracle Payroll has not created default tax records for the employee.