1099 Withholding Tax Calc - APOHBTTXCC

For sites that need to withhold taxes from payments to a vendor, the 1099 Withholding Tax calculation can be used. This process examines an Open Hold set file and creates additional records in the set that offset the invoice's distribution amount by the total amount of the taxes withheld. When the set is distributed and a check is created, the check amount will be the difference between the amount owed to the vendor and the tax withheld. If the check format is defined to show all transactions for an invoice, then both the invoice amount and the withheld amounts will appear on the stub.

BusinessPlus must be configured before this tax calculation method may be used. The instructions here will provide the means to create the settings necessary to process 1099 Withholding transactions in Open Hold. It is highly recommended that you consult PowerSchool for further information as additional settings may be required.

Before BusinessPlus can process the distributed tax liabilities created by this method and post them to the correct liability account(s), a separate OH Division for the transactions must be created so that distinct Posting Codes can be defined in GLUTSPPP. With the new Posting Codes, posting strategies can be defined in GLUTSPSI.

Additionally, several common codes must either be created or modified. These common code CK99/RELATE03; Common Code Categories RT01and RT02; and common code CK99/WITHHOLD.

The 1099 Withholding Tax calculation process looks at each record in an OH set file and determines whether it requests that tax be withheld. The "trigger" for this is the correct combination of Relate Codes 1 and 2. The first Relate Code should be a valid 1099 RELATE-TO code (e.g., CC, RE, etc.). The second Relate Code is the actual trigger. This trigger is defined in Associated Code 3 of Common Code CK99/RELATE03. A suggested Withholding Code trigger is "WH". Since RELATE-TO codes are validated by BusinessPlus, both of the Relate Codes used must be defined in Common Codes RT01 and RT02.

Common Code CK99/WITHHOLD sets the withholding percentages. Up to five withholding percentages (which will be applied to the distribution amount) may be entered in the Associated Numeric Value fields. The corresponding posting codes are entered in the Associated Code fields, and the corresponding 1099 RELATE-TO codes are entered in the Associated Description fields. Finally, the Division code to be used on new transactions is entered in the Short Description field.

The system flow of data processing using this method would go as follows:

1. Create an Open Hold set (APOHBTUB). For each set record for which you wish to withhold taxes, enter a valid 1099 RELATE-TO code in the first Relate Code field and your Withholding Code in the second Relate Code field.
2. Run the 1099 Withholding Tax calculation (APOHBTTXCC) on the OH set. This process goes through each record in the set and qualifies it for withholding processing. If a transaction qualifies, then one record is added to the set for each of the withholding percentage entries (defined in Common Code CK99/WITHHOLD) with a credit amount equal to the percentage times the distribution amount of the qualifying record. The added records will be assigned a Relate Code based on those defined in Common Code CK99/WITHHOLD. Note: If it is necessary to run the 1099 Withholding Tax calculation a second time, you must first delete the tax records created the first time.
3. Run the Set Proof (APOHBTBP) to verify the correctness of the set. After making any necessary adjustments, distribute the set (APOHINVP).
4. Select the set for payment (APOHPPSP), and then run the checks (APOHPPPA). If the check format is defined to show all transactions for an invoice, then the withheld amounts will appear on the check stub along with the invoice amount.

It is your responsibility to ensure that the withheld taxes are distributed to the proper agencies at the correct times. To determine the amount owed, run a GL report to show the amount set aside in the tax liability accounts during a given period, and then create an Accounts Payable set to generate the payments.