Potential IRS reporting change if Social Security rate is not extended

Hello - We received notice from ADP that due to the Federal Social Security rate changes this year that if the current 4.2% rate is not extended that they feel the IRS will require separate reporting capabilities for the different tax rates applied throughout the 2012 tax year. We are curious if SAP is addressing this issue systematically so that we will be able to comply with any changes to capturing and reporting 2012 taxes to the IRS.
Below is an excerpt from the notice received from ADP. Thank you for any information you can provide on this matter...
If the 4.2% Employee Social Security tax rate is not extended before we begin processing March 1 payrolls, ADP anticipates the likelihood that the IRS will require separate reporting to reflect the different rates for Social Security wages, taxes, Tips, Uncollected Social Security tax on Tips and Group-Term Life (GTL), and non-taxable Third Party Sick Pay for each rate.
In order to comply with the potential of separate reporting mandates, the existing fields will be used for reporting all wages and taxes applicable to the 4.20% rate. ADP will create new field codes to capture and display all wages and taxes applicable to the 6.20% rate. These changes would require your company to store the Social Security wages, taxes, Tips, Uncollected Social Security tax on Tips and Group-Term Life (GTL), and non-taxable Third Party Sick Pay in a separate code within your payroll system.

Kristy,
While BSI and SAP will be on top of getting the correct rate out as soon as possible I do understand what ADP is refering to. I also have a client that received that simialar notice.
At this time nothing has been release from SAP on how they will attempt to handle this if indeed the IRS makes this a mandatotry rule for tax reporting in 2012. ADP is just making the comment for now that it could happen but there is nothing in place that notes this as a mandate. If the IRS determines this is to happen it will required a W-2 Form change and those are always delivered in the YE notes from SAP beginning in October each year. My clients use processing class 30 in their wage types with a code of "T" so that they can set up accumulators. Since the tax of 4.2 is in place from Jan to March I feel that the Monthy and Quarterly accumulators will house the information needed to accomodate such a requirement.
How SAP will dictate this gets into the W-2 will have to wait until the IRS publishes an official guideline on the reporting.
I know this is not the answer on "How this will be handled" but you will want to be sure to keep an eye out in October for SAP solutions that relate to 2012 Tax Reporting. https://websmp208.sap-ag.de/~form/sapnet?_SHORTKEY=01100035870000733666&
Hope this helps.

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Edited by: Imran on Oct 21, 2010 11:40 AM

KZPESI=10000 from T511K
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AMT= 0001 Set
AMT+ 0002 Addition
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AMT?KZPESI Comparison
>
At this point I want to set another comparison based on amount in 6004.
if Amount in 6004 is > 0 then
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hope it'll b more clear now

PCR Social security: want to use wage type amount in decision operation

PCR Social Security: Want to use wage type amount for comparison
Posted: Oct 21, 2010 11:00 AM Reply
Dear Guru's,
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Edited by: Imran on Oct 21, 2010 11:40 AM

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