Streamline Year-End Payroll and Processes: Q&A with SAP Payroll Expert Mike Timm

SAP HCM and payroll expert Mike Timm took readers’ questions on year-end payroll in SAP, as well as questions on BSI 10, and streamlining payroll in your SAP systems.

Review all the discussion in this one-hour online chat with Mike Timm of Integrated Consulting Group, a featured speaker at SAPinsider’s annual HR event

View the chat replay for all of Mike’s tips and discussion on SAP Payroll and preparing for year-end, and read the edited transcript Streamline Year-End Payroll and Processes: Q&A with SAP Payroll Expert Mike Timm.

Molly Folan, SAPinsider Conference Producer: Welcome to our Q&A on SAP Payroll! Thank you all for joining.  I’m pleased to introduce Mike Timm, who will be taking your questions today. Mike Timm of Integrated Consulting Group is a speaker at our multi-city seminar Optimizing Payroll in SAP, which is heading to Chicago and Vegas in the coming weeks.

Today, Mike is taking your questions for the hour on some changes to SAP Payroll – including BSI 10 upgrades – as well as preparing for year-end and ways to simplify payroll processes.

Mike Timm: Hi, Molly. I’m happy to be here and have been looking forward to this Q&A. I’m sure most of us are deeply involved with year-end and BSI 10 and have questions.

Molly Folan: Thank you!

Mike, as you can see, some of your participants have already posted some of their questions, so we’ll let you get to those now!

 

Comment From Guest

We are having lots of issues installing BSI 10, if we do not get this installed by the Nov 30th deadline, what are the consequences that issues that we be facing?

Mike Timm: Luckily, the November 30, 2014 deadline proved to be flexible. BSI and SAP will continue to provide updates to BSI 9 through March 31, 2015. You can see the update at service.sap.com/hrusa under the ‘Year End 2014’ tree node.

Molly Folan: When was the extension announced?

Mike Timm: Within the last few weeks is when I saw it on the SAP portal. I try to check the portal on at least a weekly basis to see what new announcements have been made.

 

Comment From Rolanda

Now that there is an extension to updates to BSI 9.0, what is your recommendation as to when to upgrade to BSI 10.0? To reduce some risk, should companies wait until after the year-end process is over and upgrade in late January?

Mike Timm: I think it depends on where you are and your timeline. Many companies have BSI 10 in place or are a week or two away from having it in production. If things are working, I wouldn’t stop the upgrade.

If the upgrade is having significant issues or hasn’t been started, then definitely wait until W2’s are out the door.

 

Comment From Deb

Hi, in upgrading BSI Tax Factory it appears that we must now enter estimated quarterly taxes into a table through SPRO; I heard that it is only required for NY. If we are in Florida, must we do it for any tax types? All tax types? What are the consequences if we don’t do it at all, or if we do not update it as the quarterly estimates would change?

Mike Timm: I’m not an expert on local taxes across all the states, but know that New York imposes an employer tax called ‘Metropolitan Commuter Transportation Mobility Tax’ based on quarterly gross wages. It is a tiered tax, so estimating the quarterly determines the tax rate BSI will use. If you are interested in NY tax, it is SAP tax type 19 Payroll Expense Tax.

This NY MCTMT is the only tax I have seen that would utilize the estimated quarterly gross wages. The companies I have worked with to install BSI 10 are not in NY and we have not maintained the IMG node. One is live and the other will go live shortly with no consequences. With that said, those companies will monitor whether or not they need to start maintaining as updates come through, but are comfortable eliminating the maintenance at this point.

 

Comment From Deborah

Hello, one question regarding the New York estimated gross wages: Will we be required to update the table after each quarter?

Mike Timm: I believe the intention is to update each quarter, however, if your estimates are consistent quarter to quarter you can probably get away with using date delimitation further in the future. I’d probably use a calendar year and make sure it doesn’t get lost before the next calendar year.

Comment From Bijay

Just one follow up 🙂 — all states, or I will have to add 100s of OHIO locas?

Mike Timm: You should be safe with just NY at this time, but review of updates from SAP and BSI will need to be thorough enough to identify additional tax authorities that may need the functionality.

Comment From Pankaj

Where in BSI 10 can we look at the tax rates to be used for example rates to be used for NY Metro Tax?

Mike Timm: The rates BSI provides are all ‘hidden’ behind the scenes. As users we can override the rates BSI sends us in updates, but within the BSI GUI we don’t have a method to look directly.

You can use the testing tools to work around this to a degree, but this method has caveats such as limits being hit, etc. and requires several iterations of the test with differing input values.

 

Comment From Bijay

We are just upgrading to BSI 10.d. Can you say one thing that we need to do for the Courtesy Withholding concept?

Mike Timm: Under Tax Areas Courtesy Withholding V_T5UX9_COUWH needs to be maintained to get IT0207 and IT0208 working nicely together. BSI by default has the courtesy withholding turned off, which was not the case prior to BSI 10.0. This has caused a fair amount of problems for many companies because it is such a big change.

 

Comment From Guest

We have some questions about HRSPs or CLCs – when do we need them and what are other options?

Mike Timm: Ideally, the year-end HRSP or CLC is being put in place during November.

Comment From Trish

Is there documentation available that would detail the information contained in the year-end HRSPs?

Mike Timm: Yes, through the SAP support portal you can get a list of all the individual notes that are included in HRSPs and CLCs. You can also get a list of issues that have been found after implementing the HRSP and CLC with the corresponding correction note.

Comment From Debbie B

You may want to remind your attendees that additional CLCs may be released in late November, December and even early January, so they should continue checking service.sap.com/hrusa for updates.

Molly Folan: That’s great advice, we will be sure to share that info – thank you!

 

Comment From Guest

I have also had some issues with the TF10 upgrade, specifically regarding reciprocity. For instance, our employees who live in MD and work in DC used to pay MD taxes, but after the upgrade no state tax is assessed. Any suggestions there?

Mike Timm: Yes, reciprocity has been an issue. You need to look closely at the Courtesy Withholding node in the IMG. I recently had to implement some Nexus configuration as well that wasn’t needed prior to BSI 10.

 

Comment From Debbie McCarty

We have upgraded to BSI 10, but are having trouble with applying updates. Has anyone had any experience with using the Sync Tool?

Mike Timm: The sync tool will be very helpful by removing the dual maintenance we’ve had to do prior to BSI 10. It’s crucial that the correct level of BSI updates and SAP updates are in place. I know making sure the new process is followed to get the cross-client and client-specific transport created has been troublesome.

SAP provides a user guide on the service portal that details it all out.

 

Comment From Rolanda

We are also upgrading to BSI 10.0. Is there a template of what should be tested? Not sure if we know what all to test.

Mike Timm: I’m not familiar with any templates, but recommend a very thorough testing.

Depending on your system environment, you can have BSI 9 and 10 running at the same time and access them directly to run the batch tests for comparison.

If you have used the BSI batch testing tool in the past, you can use the same file in 10.0. Just change the check date and see how the taxes calculate.

Comment From Matt

We ran a full payroll in our test environment that was a copy of production before and after the upgrade to TF10 and compared the results to identify any differences. Quite a lot changed, so I would recommend doing something similar.

Comment From Guest

To Matt: in your testing did you find any significant issues?

Comment From Matt

When we did our parallel test of before and after BSI 10 upgrade, we found a lot of issues with reciprocal agreements, as well as issues with NYC taxes (both withholding and the metro tax type 19).

 

Comment From Guest

In 2016 will SAP be providing a solution for the new IRS tax forms 1094 and 1095 to satisfy ACA reporting requirements?

Comment From Guest

Will SAP support the Obamacare reporting to individuals via Tax Reporter?

Mike Timm: I haven’t seen any documentation pointing either way at this point. It’s something we’ll have to continue watching for on the SAP service portal.

Comment From Debbie B

This was part of the ASUG end of year presentation: Affordable Care Act — SAP Benefit

— SAP Note 2060131 announces the legal change delivery for Information Reporting for Employer Sponsored Coverage and Minimum Essential Coverage

— SAP FAQ Note 1910650 publishes a list of questions and answers related to Section 1511 of the Patient Protection and Affordable Care Act (PPACA)

— SAP Note 2015562 enables you to comply with the changes in the Model COBRA Continuation Coverage Election Notice and General Notice

— SAP Note 1869937 delivers the updated Model COBRA Continuation Coverage Election Notice

Molly Folan: This is great, thanks for sharing with everyone!

 

Comment From Pankaj

Good afternoon, Mike. What is the significance of BSI introducing Estimated Quarterly Gross Wage Parameter as part of BSI 10 upgrade? Is this config mandatory? I ask since the absence of this config does not seem to have an effect.

Mike Timm: The configuration only appears to be mandatory for New York at this point to handle the tax type 19. However, it is something we will all need to monitor as updates occur in the future.

 

Comment From Carol

Are there consequences for not creating and activating feature 10EET?

Mike Timm: To be honest, I have followed the BSI 10 upgrade guide and have always activated the feature. I would expect underlying code will be wanting it activated, but can’t say for sure.

Comment From Lou Ann

We didn’t activate it at first in testing, and got one error message per employee in the Job Log, so have now activated it to eliminate all the error messages.

 

Comment From Guest

Is there a transaction code for the BSI Batch Test Tool?

Mike Timm: You access the batch test tool through the BSI GUI. Prior to 10, it was a GUI installed on Windows machine, but with 10 it is now web based. There are some differences, but the testing tools are very similar in functionality and use.

 

Molly Folan: Hi all! We are nearing the end of the forum, so if you have any more questions, please submit them in the next minute or so, to ensure there is sufficient time for Mike to get to them. Thanks!

 

Comment From Trish

Can you explain the new wage type/TWD that was added with BSI 10.0 and what it is used for?

Mike Timm: /TWD is the new wage type to provide tracking of Nonresident Days Worked. Note 1937142 goes into a good amount of detail with regards to how it is utilized.

 

Comment From Pankaj

When you mention nexus configuration, are you referring to configuration(Override) both in SAP as well as BSI?

Mike Timm: Nexus configuration is done in SAP. I can’t remember the exact IMG node, but it is under the tax node of the Payroll tree. I’ve used this in the past to override reciprocity, but have had to use it more with BSI 10.

 

Comment From Trish

Do we have to retroactively reprocess payrolls to populate the /TWD wage type for all of 2014?

Mike Timm: No, utilize the wage type going forward in 2015.

 

Comment From Guest

What’s the difference between the BSI Batch Testing Tool and the Synchronized Payroll Data?

Mike Timm: The batch testing tool allows you to take raw data from the SAP payroll log (BSI Interface), put it in a text document, and then upload to BSI. You can tweak the text document by changing values and reupload and run again.

It’s a nice way to take a test base representative of your employees, change check date or other values and see how the tax calculations come out directly in BSI. I find it easier than getting all the data setup correctly in SAP.

 

Comment From Guest

Hi Mike, Can you please advise on critical tasks for closing out the year? When do these tasks need to be completed (timing of employee updates etc.)?

Mike Timm: Ideally, activities such as HRSP and CLC application have are done in November or the first week of December.

Claims clearing activities have been ongoing and completed by mid-December. There are always a few last-minute that pop up.

HR needs to be extra diligent getting any master data change in, especially, if they have any impact on payroll such as base pay changes or bonuses.

Ideally, we’ve been working on year-end activities since early October to keep things more relaxed through the last quarter.

 

Comment From Guest

Hi, please elaborate on the logic SAP provides regarding overpayments, so-called “claims.”

Mike Timm: One of the nice features of SAP in the overpayments handling. It can be difficult at first, but once understood and the process is outlined, it works well.

The SAP service portal has documents specific to retro activity and the claims process that dive in more detail than I could go here. However, don’t hesitate to contact me to discuss in more detail.

 

Comment From Debbie B

Have any of your clients rolled out the online W2s with the recent improvements provided by SAP? If yes, how did it turn out?

Mike Timm: We are in the process of testing. Had a few bumps, but initial tests are good.

 

Comment From TK

Can you explain how Base Wages are used for tax calculation? Used to be Base Wages are /114. SAP introduced some changes regarding handling of pre-tax deductions and supplemental payments, but I don’t see how the change in Base Wages affects tax calc. What am I missing?

Mike Timm: I don’t think you are missing anything and haven’t seen an impact to the tax calculations either.

 

Comment From Guest

While trying to use new SAP Synchornize Payroll Data Tool with transaction HRPAYUS_SYNC_TAX_DT. We are expecting this tool to make changes to only new changes to Tax Authorities. Instead it is trying to update all the entries in tables T5UTD (Tax Types). Are you aware of any problem regarding that?

Mike Timm: I haven’t run across this issue at this point, but you may want to look at notes 1975742,  1984911,  1992315,  1992697, and  2009438.

 

Molly Folan: This brings us to the end of today’s forum, and what a successful one it was! Such excellent questions and answers! Thank you to all who posted questions and followed the discussion.

And a special thanks to Mike for sharing your expertise with us today! We truly appreciate it.

Mike Timm: Thank you and everyone for attending and asking good, tough questions. If you think of more questions or would like to discuss any in more detail, please don’t hesitate to contact me at mtimm@integratedcg.com or @MikeTimmSAP.

 

Molly Folan: Thank you, Mike Timm, again for taking these questions. Great information and advice today in just 60 minutes!  Looking forward to seeing you soon!