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OHAUTX00374 - Specify additional tax reciprocity attributes

General Material Data   RFUMSV00 - Advance Return for Tax on Sales/Purchases  
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In this Customizing activity, you specify additional reciprocity attributes, such as the Nexus Indicator or Courtesy Withholding for any applicable resident/ non-resident state pairing.

The Nexus Indicator allows BSI TaxFactory to calculate withholding taxes based on the secondary regulatory withholding requirements for that resident/ non-resident authority pairing. In this Customizing activity, you can define whether you want to calculate withholding taxes based on the primary or secondary regulatory withholding requirements.

The secondary method takes precedence over the primary method only if the non-resident employer has a 'Nexus' connection with the resident authority, or is otherwise subject in any manner to the laws of the resident authority, whereby the employer is required and/ or authorized to use the secondary method in lieu of the primary method for a given resident/ non-resident authority pairing.

You can also determine how you want to apply courtesy withholding when an employee works and resides in different tax jurisdictions. In this Customizing activity, you can make this configuration on state level, for a combination of resident and work state.

You have contacted BSI to get a secondary method implemented on BSI side for the specific agreement between the tax authorities and your company.

TaxFactory automatically calculates withholding taxes based on the primary regulatory withholding requirements for each resident /non-resident authority pairing. That is, the default value for the Nexus Indicator field in the standard system is Primary (Default) - Business tax registration not filed.

For BSI TaxFactory 10.0, courtesy withholding is disabled by default.

If you want to use the primary method for the Nexus Indicator and do not want to apply courtesy withholding, you do not need to perform any activity.

If you want to use the secondary method and/or apply courtesy withholding, execute this activity and proceed as follows:

1. Enter a Tax Company

You can create entries valid for all tax companies by leaving this field blank. When you leave the field blank, the system displays a warning message saying that "All fields which define the area have initial values. Check input values". Choose Continueand the entries you make will be valid for all tax companies.

1. Indicate the work and resident authority pairing

You can create entries valid for all work tax authorities or resident tax authorities by leaving these fields blank.

1. Choose Secondary (Nexus) - Business tax registration in the Nexus Indicator field.
2. Choose the relevant option in the Courtesy Withholding field.

Note

As mentioned above in steps 1 and 2, you can create entries valid for all tax companies, work tax authorities and resident tax authorities by leaving these fields blank. The system first reads courtesy withholding and Nexus configuration for those records that have entries in these fields.

For example, for employees with tax company US01 who work in IL and live in MI, the system reads the configuration in the following order:

Reading Order	Tax Company	Resident Tax Authority	Work Tax Authority
1	US01	IL	MI
2	US01	IL
3		IL	MI
4		IL
5	US01		MI
6	US01
7			MI
8

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