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

**Updated on August 21st, 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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Infotype%200161
6 Comments
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  • 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?

    • 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).
    • 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”.