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Author's profile photo Debora Lermen

Redesigned Withholding Compliance Lock-In Letters 2800C and 2808C

**Updated on September 24, 2020: SAP Note 2967813 released for all customers**

SAP has released SAP Note 2967813. This SAP Note delivers a correction for Redesigned Lock-in letters in scenarios with Additional Withholding.

**Updated on August 21, 2020: SAP Note 2951750 released for all customers**

On March 4th, 2020, the IRS issued the Special edition of e-News for Payroll Professionals – Redesigned Withholding Compliance Lock-In Letters 2800C and 2808C coming soon (https://content.govdelivery.com/accounts/USIRS/bulletins/27f3b0b).

The IRS stated that “The Tax Cuts and Job Act of 2017 (TCJA) changed withholding calculations by eliminating allowances, and in response, the IRS redesigned Form W-4, Employee’s Withholding Certificate. The Service is also redesigning the Withholding Compliance Lock-in Letters to reflect these changes.”.

After receiving a lock-in letter in the new format, customers have up to 60 days to start withholding based on that lock-in information.

 

To enable you to comply with this legal change, SAP has released SAP Note 2951750 – [US] New 2020 Lock-in letters. This SAP Note 2951750 delivers the following changes:

  • Payroll changes in the USTAX payroll function
  • New fields in infotype IRS Limits USA (0161), as required by the new lock-in letter format. For a preview of these changes, see the screenshot below:

Infotype%200161

SAP Note 2958696 delivers the same changes for HR Renewal.

I hope you find this information helpful!

Best regards,

Débora

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      19 Comments
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      Author's profile photo Randall Allred
      Randall Allred

      Hi,

      I was testing using a withholding override using an additional withholding amount on the IT0161. The system seems to ignore the additional amount in tax calculation? Is this expected?

      Author's profile photo Debora Lermen
      Debora Lermen
      Blog Post Author

      Hi Randall Allred,

      If an employee has IRS mandates stored in IT0161, the system compares the taxes calculated using IT0210 and using 0IT160, and uses the amount which is more favorable to the IRS.

      If the additional withholding you entered in IT0161 is ignored, the reason may be one of the following:
      • IT0161 is not read (because of different dates, locked record, and so on).
      • IT0161 is read, but data from IT0210 has generated a higher tax amount (and the system used that amount instead).
      Author's profile photo Randall Allred
      Randall Allred

      I could get all the other new fields to work except the additional withholding amount which if were added would be considered higher withholding than the IT0210. However, I will check again. Thanks.

      Author's profile photo Debora Lermen
      Debora Lermen
      Blog Post Author

      If the issue persists, please create an incident for SAP using component PY-US-TX.

      Author's profile photo Debora Lermen
      Debora Lermen
      Blog Post Author

      Hi Randall Allred,

      Please refer to SAP Note 2967813, it corrects the issue that you mentioned.

       

       

      Author's profile photo Randall Allred
      Randall Allred

      Hi Debora Lermen,

      We applied the note, and it does resolve the issue. Thanks.

       

      Author's profile photo Syam Ponnada
      Syam Ponnada

      Can you please explain difference between "Annual reductions from withholding" and "Total credits for dependents".

      Author's profile photo Debora Lermen
      Debora Lermen
      Blog Post Author

      Hi Syam Ponnada,

      They are the same. In other words: the field “Total credits for dependents” in the system corresponds to the information you find on Form 2800C, “Annual reductions from withholding”.

      Author's profile photo Alicia Robinson
      Alicia Robinson

      Hello -

      Has anyone had this error?  Did I miss a config setting somewhere?

      Data record 000000000161FED    9999123120181216000 is not between 04/08/2018 and 11/16/2019
      Data record 000000000161FED    9999123120181216000 is not between 11/17/2019 and 12/31/9999

      I have an employee whose last IT0210 FED record is from 11/19/2017  to 12/31/9999 so this does not fall in the 2020 changes.  This employee also had an IT0161 FED record dated 12/26/2018 to 12/31/9999.  We have received a new 2020 lock in letter and need to create the IT0161 record starting 12/27/2020, but we are getting the above errors.

       

      Thanks,

      Alicia

       

      Author's profile photo Marcelo Rescigno
      Marcelo Rescigno

      Hello Alicia,

      This doesn't seem related to any config related to the new fields.

      If you don't figure it out, create an OSS Ticket so our colleagues can have a look into your system.

      Best regards,
      Marcelo

      Author's profile photo Alicia Robinson
      Alicia Robinson

      Marcelo -

      It's as if it's a time constraint issue, but there shouldn't be a time constraint on this IT.

      Message No. PBAS_SERVICE038

      The system identifies the data record as inconsistent

      • Customer-specific settings for grouping infotypes have been changed without the database being adjusted accordingly.
      • A customer program was used to add data to the database, without reference to the grouping values.
      • The infotype is not supposed to be grouped, but the grouping mechanism was activated inadvertently.

      I have checked table V_T582A and there are no constraints to create this error.  Where else could this be coming from?

      I want to make sure I've checked all areas before I log a message with SAP.

      Author's profile photo Marcelo Rescigno
      Marcelo Rescigno

      Hi Alicia,

      I see, it makes sense to check things on your end before logging a message. So, some points to help you out on this search:

      I agree that this seems as a time constraint issue. However, that's also strange because as you've pointed out - this IT should not have. Furthermore, nothing in this sense was changed with the new Lock-in format.

      Another thing that puzzles me is why these dates? What has happened to this employee that the system doesn't allow a record to cross from 11/16/2019 to 11/17/2019?

      Do you have CE active in your system? And have this employee had a Tax Company change in this day? These are some things that I can imagine to affect this scenario, but they are more related to the Core (international) infotype framework and probably should have happened before as well.

      Best regards,
      Marcelo

      Author's profile photo Alicia Robinson
      Alicia Robinson

      Marcelo –

      The employee did change company codes on 11/17/19, but why should that impact the IT0161 setting?  We don’t require a change to IT0210 when an employee changes company codes.  We have never hit this issue until the new changes went in, but I would have to review all of our old pre 2020 setups to see if anyone ever changed companies.  I’m sure they have because that’s a regular occurrence here.

      It appears we have more than this one issue as of today.  We have another employee that the error is on a personnel area they had at hire date 20 years ago.  We are keying an IT0161 record for the very first time on this employee.  Looks like I'll be logging a message this afternoon.

      Author's profile photo Alicia Robinson
      Alicia Robinson

      Marcelo -

      I logged the following message with SAP:

      836604/2020 IT0161 errors when creating new records

      This is a high issue with us as employers have timeline requirements on getting the new lock-in letters set up on employees and to withhold the correct taxes.  We are unable to create any new 2020 or 2021 records due to the multiple errors we are receiving.

       

      Author's profile photo Alicia Robinson
      Alicia Robinson

      Hello Randall Allred

      I'm just curious if you've had any issues creating new 2020 or 2021 IT0161 records for employees?

      Do you change the IT0161 records when an employee changes company codes (if you have multiple companies)?

      Does anyone else have this situation?

      Thanks!

       

      Author's profile photo Randall Allred
      Randall Allred

      Hi Alicia, we have not encountered any issues. Also, we only have one company code.

      Author's profile photo Alicia Robinson
      Alicia Robinson

      Thanks for the quick reply!  Much appreciated.

      Author's profile photo Thomas M
      Thomas M

      Hello community,

      It seems that the calculations are not correct when the lock-in letter is in a new format (i.e. BEGDA >= 01/01/2021) and the employee is on the old format of the W-4. We are thinking about asking our employees who have received IRS lock-in letter to create a new W-4 form. Has anyone faced this issue?

      Regards,

      Thomas

      Author's profile photo Marcelo Rescigno
      Marcelo Rescigno

      Hello Thomas,

      Which issues are you facing? Is the new Lock-in not being used for calculation?

      Please, bear in mind that the system will always perform the Income Tax Withholding calculation using both forms - the W-4 information and the lock-in information. And then it will pick the one that results in a higher tax amount.

      Best regards,
      Marcelo