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Payroll Garnishments – Tax Levies

Over the years, you learn where to obtain good, useful information.  You also learn who provides consistent, accurate and helpful commentaries on difficult subjects.  Terry Heley, Escalation Engineer, at Microsoft is one of those people.  Terry has been managing Microsoft Dynamics GP payroll code and tax updates for a long time.  She is also the most knowledgeable person I know of when it comes to Microsoft Dynamics GP payroll issues.  I recently had a difficult garnishment setup situation for one of our customers.  After a considerable amount of frustration and trial and error, I reached out to Terry for any insight she may have on our garnishment problem.   She provided me with a set of examples outlining garnishment setups for tax levies, child support, creditor garnishments, garnishments taken before child support and multiple garnishments with previous marked.  As they say, a picture is worth a thousand words.  Well, when it comes to garnishments, an example is even better than a picture.  Below is the first of a series I will be posting about setting up garnishments in Microsoft Dynamics GP.  Thank you Terry.

Garnishments-Tax Levies:

A federal tax levy is accomplished by ‘garnishing’ an employee’s wages to the extent that they are not exempt from the levy.  For example, there may be a tax levy that is for $25,000.  The tax levy deduction will be taken from the employees ‘take-home pay’ until it reaches the exempt amount.

The exempt amount is an amount that comes from the table (after looking at form 668-W that the employee fills out – (according to the number of exemptions, the pay period, and the filing status)).

The ‘take-home pay’ will be calculated as Wages, minus all Taxes and Deductions (both voluntary and involuntary) that were in effect at the time of receiving the tax levy.  Once an employee’s take-home pay has been determined, all but the exempt amount is subject to the levy.

Any new payroll deductions that are initiated by the employee after the levy has been received by the employer must be deducted from the exempt amount when determining the employee’s net pay, unless they are required as a condition of employment.  (This also includes increases in elective deductions such as a 401k.)

It looks like Tax Levies are always an amount (by looking at the form 668-W).

Ex:  Employee Arthur receives $1,211.54 every two weeks.  On Aug 1, 2010, the employer receives form 668-W stating that a federal tax levy was being issued against Arthur’s wages for $25,000.  Arthur claimed married filing jointly with 3 personal exemptions on Part 3 of the form.  (The exempt amount taken from the table is $657.69.)  As of Aug 1, Arthur had the following deductions:

Federal income tax $44.44
Social security tax 50.88
Medicare tax 17.57
State income taxes 30.00
401(k) plan (3% of salary) 36.35
Health insurance (after tax) 45.00
Total: $224.24

Prior to the Tax Levy, Arthur’s take-home pay is $987.30 ($1,211.54 – $224.24).  The exempt amount of Arthur’s take-home pay (taken from the table) is $657.69.  Therefore, the amount subject to the tax levy is $329.61 ($987.30 – $657.69).  And the take home pay after the Tax Levy is $657.69.

How would we set up this deduction?

In Employee Deduction Maintenance
Deduction Type: Garnishment
Original Amount $25,000
Method: Fixed Amount
Garnishment Category: Tax Levy
Amount $25,000
Percent N/A
Earnings N/A
Maximum Deduction Codes
Federal FEDLEVY (this is just an example)
State N/A

In Garnishment Maximum Setup
Code: FEDLEVY
State/Fed FED
Method Percent of Earnings
Max Withholding Percent 100%
Max Exempt Amount $657.69 (This is the amount taken from the table)
Min Wage Rule Amount $0
Earnings Code FEDLEVY

In Earnings Setup
Code: FEDLEVY
Include in Earnings
Pay Codes All
Deductions 401(k) & Health Insurance (According to the info we have about Federal Tax Levies, it should be all deductions that are being taken at the time the tax levy was issued.  New deductions after the tax levy is in place would not be included.)
Taxes All Checkboxes Marked

Pay code

Other Deductions

Calculate Checks report

Recap

Prior to the Tax Levy, Arthur’s take-home pay is $987.30 ($1,211.54 – $224.24).  The exempt amount of Arthur’s take-home pay (taken from the table) is $657.69.  Therefore, the amount subject to the tax levy is $329.61 ($987.30 – $657.69).  And the take home pay after the Tax Levy is $657.69.

Employee FICA Social Security Dedution Change

You should be aware by now that employees will have FICA Social Security withheld at a 4.2% rate in 2011 rather than the 6.2% rate used in 2010.  However, the employer still has to pay FICA Social Security at the 6.2% rate.  Under current Great Plains tax code calculations, this will result in incorrect amounts indicated on the Check Register for Employer Owed FICA ( see screen shots below) until the Service Pack/Tax Code update is released by Microsoft (currently scheduled for mid January 2011).   Any payroll run in Great Plains with a 2011 payroll check/direct deposit date run prior to the mid January Service Pack/Tax Code update must make corrections for the federal taxes submitted to the IRS and also make corrections to the general ledger posting journals from payroll.  You should also assume that the quarterly 941 and the year end employer tax reconciliation may also require adjustments for this issue. 

The screen shots below are taken from Fabrikam for one employee.  The tax schedule used is dated 12/22/2010 (Round 1 2011)  which includes the 4.2% withholding for Employee FICA Social Security.  The amount withheld from Pilar Ackerman is $52.96 ($39.37 + $13.59).   The Employer Owed FICA on the Check Register is also listed as $52.96.  The correct Employer Owed FICA is actually $71.72 ($58.13 + $13.59).  Using the Employer Owed FICA from the Check Register will result in under payment of FICA taxes due by the employer of $18.76 ($71.72 – $52.96).    The general ledger posting journals for payroll will also be incorrect and musts be adjusted as well. 

Do not install the Round 1 2011 tax table update in your environment until all payrolls have been prepared with payroll check dates in 2010 and your Year End Wage File has been created.  I can install the Round 1 tax table update in my environment as I am not preparing any actual payrolls.  When the Service Pack/Tax Code update is released in mid January, Microsoft will undoubtedly have additional updates and/or information available at that time.

It is critically important that the individuals responsible for transmitting taxes due to the IRS understand and are familiar with this issue.  Please share this information with those individuals in your organization that are responsible for payroll.   Microsoft will be updating their website with pertinent information, and I would recommend that all interested persons check with Customer Source at the Microsoft website.

Round 5 Tax Code Update – HIRE Act

If your are struggling with installation of the Round 5 Tax Code Update for Microsoft Dynamics GP payroll, there is an additional wrinkle you probably have not realized.  The documentation for the update anticipates that you will have installed the tax code udate prior to any payroll runs in July (July being the start of 3rd quarter reporting).  The documentatiton instructs you to run the report for the 2nd quarter only.  If you had payroll runs in July (3rd quarter) before you install the Round 5 Tax Code you have FICA amounts posted to the general ledger that should be adjusted.

 If you did have payroll runs in July, it is important to run the Payroll Tax Adjustment Report (HIRE) for the third quarter to identify FICA amounts that you will have to back out of your general ledger.  Another word of caution.  Be sure to run the Payroll Tax Report after installing the Round 5 Tax Code, but before you run any more payrolls in July.  The report will list all FICA amounts for the ENTIRE quarter so it is important to understand under what conditions you are running the report.

The HIRE Act actually went into effect on March 19, 2010.  If you had HIRE Act qualified employees for the period 3/19/2010 to 3/31/2010, then you should determine the general ledger adjustments for FICA wages by reviewing historical payroll posting journals, and again make the necessary adjustments to FICA expense and liability. Running the Payroll Tax Adjustment Report will list all FICA wages for HIRE Act qualified employess for the ENTIRE 1st quarter.

I don’t want to sound unkind, but there must be an easier way to encourage employers to hire new employees.

Microsoft Dynamics GP – Year End Payroll Update

The time is at hand for review and consideration of the payroll year end process for Great Plains. This year (as in 2008) the year end update involves a service pack installation. In other words, this year end update will change the Microsoft Dynamics version number and more importantly, it must be installed on the server (where it will update tables and stored procedures), then it must be installed on each workstation running Great Plains so each workstation “synchronizes” with the same version as the server. Depending upon the size of the database(s) and the number of workstations, this can take a few minutes, or several hours.
I am not overly found of how Microsoft deals with the Year End Update, especially since the timing for installation is always difficult at year end (re: holidays, scheduling, vacations, parties, etc, etc). Keep in mind the basic timing required for completing the year end processes successfully.

1. Make sure all 2009 pay runs are complete. This means all payroll checks and direct deposits with a date on or before December 31, 2009 have been run. Many companies will set a date after which no payroll checks are allowed to be prepared. Another way of saying this is don’t fire anyone after the cut-off date so you don’t have to provide a final check. Also, don’t wait till the last minute to issue bonus or holiday checks. Anyone still remember those?
2. Install the Year End Update. Remember, this is a Service Pack and can take time. It will probably involve the IT Department or your friendly neighborhood Great Plains consultant (all of which have holidays, vacations, parties and such on their schedules). It is also a good idea to have your Accounting Department verify all is well after the Year End Update install (accountants don’t generally have holidays, vacations and parties as they like to work all the time and don’t have many friends).
3. Create the Year End Wage File. This is the file that your W2s are dependent on. If this file is not created successfully your W2s will not be available for distribution. Not having W2s ready for distribution to employees can get really, really ugly, not to mention how the IRS feels about missing distribution deadlines (I have heard stories about them coming to get first born children after a deadline is missed, but I am pretty sure they are just stories).
4. Setup fiscal periods for 2010. This is pretty easy and has probably been done already, in fact it can be accomplished at any time. If you have rent checks due on January 1st, you have found out you cannot enter the invoice for payment without the 2010 fiscal year in place.
5. Install the 2010 Payroll Tax Update. This is not the same as the Year End Update. The Year End Update is nasty, this one is easy (at least for now it is, maybe Microsoft will change that next year). Once you install the 2010 Payroll Tax Update, you can run your first pay run for 2010. One thing to keep in mind is that the “Calculate Checks” function is when the new 2010 tax tables are accessed. You must install the 2010 Payroll Tax Update before pushing the button for Calculate Checks. If you run a 2010 pay run before creating the year end file, you are screwed (unless you have a backup and then all you have to do is restore the backup, reinstall the last 2009 payroll tax updates, create the year end wage file, reinstall the 2010 payroll tax update and then re-run your 2010 pay run). You really, really don’t want to do this, so make sure someone that can at least walk and chew gum at the same time is keeping track of things.

If you read the Payroll year-end checklists from Microsoft (and I highly recommend that you do so) you will find that they have 17 steps compared to my 5. Some of their stuff is optional (such as closing the 2009 fiscal year or deleting inactive employees). Other items are just plain not possible like “Step 12 Prepare and submit W-2 information in the federal EFW2 format, if required.” No one submits this stuff until it is nearly due and it has been reviewed, scrubbed and reviewed again, that is unless you are not fearful of discussing non reconciling items with the IRS, but then again maybe you don’t much like your first born child.

If you haven’t guessed by now, the payroll year end close can be somewhat intimidating if this is your first time. There are several backups listed in Microsoft’s checklists. Don’t try to save time by not doing the backups. If you have backups, your “you know what” can be saved. Without backups, I am not sure. Your boss just may shoot you.

Great Plains Crashes

I recently experienced the worst of all possible scenarios for a consultant. I had a client that was experiencing crashes of Great Plain at random intervals that could not be reproduced with any combination of commands or operational sequences. Crashes could occur during posting, customer and/or vendor card lookups or with the Home page presented and no activity in Great Plains. The message presented was: “Microsoft Dynamics GP has encountered a problem and needs to close. We are sorry for the inconvenience.” At that point, Great Plains would close and the user would be required to log back into the application to continue.

Working with Microsoft Support, we provided detailed information about the environment, versions, and other software installs. Due to the random nature of the problem, we could not use a DEXSQL.log as it could be running for days sometimes before a crash would occur. We removed Great Plains from the machine and re-installed, but the crashes continued. We installed Great Plains on a new computer workstation with IE and Microsoft Office, and the crashes continued. We removed all software from the new computer workstation and re-installed the operating system (XP) and Great Plains only. This seemed to stop the random crashes, but was a pain for the user as they had no internet access or use of applications such as Word or Excel. We tried adding back IE and Microsoft Office once more and the crashes resumed.

Microsoft Support then began looking at the Applications, Security and Event Logs. Review of these logs indicated error events occurring in conjunction with the Google Updater Service and the Windows Search Service. We manually turned off both of these services. At this point, the interruptions with Great Plains ceased. We subsequently added back the Windows Search Service without any return of interruptions. Microsoft Support indicated they had no history of the Google Updater Service causing Great Plains to crash, but for this customer, the Google Updater Service is not allowed to run.

If you want more information on the Google Updater Service, just Google it (sorry for the bad pun). The list returned from this search is long and interesting. I know if I ever see this error message again, the first thing I am going to try is to turn off the Google Updater Service.

Historical Inventory Trial Balance Report

Historical Inventory Trial Balance Report

Microsoft Dynamics GP recently came out with a new feature that would provide GP users that are utilizing the Inventory Module the ability to create a Historical Inventory Trial Balance report. It goes without saying that any company maintaining an inventory has had reconciliation issues between the valuation in the Inventory Module and the General Ledger control account or accounts. The HITB features will allow the following:

• The Historical Inventory Trial Balance report enables users to tie the Inventory Sub-ledger to the General Ledger, regardless of Inventory Valuation Method.

• This report will show the inventory value as of a specific date or date range, and the value of the five different quantity types (On Hand, In Use, Returned, In Service and Damaged). Keep in mind that the HITB report will only report on inventory balances from the installation date forward. So if you want to use it in the future, install it as soon as you can.

• To utilize the HITB Report, existing customers will need to apply Dynamics GP 10.0 SP2 and run a wizard-driven IV HITB Reset Tool. The IV HITB Reset tool and the Historical Inventory Trial Balance Report are both components of Dynamics GP 10.0 SP2. The wizard-driven IV HITB Reset Tool and the initial reconciliation is complex, and you may want help with this from your Microsoft Dynamics GP VAR.

• New Customers who begin utilizing Dynamics GP 10.0 after SP2 releases or existing customers who create new companies AFTER SP2 has been applied, will not have to run the HITB IV Reset Tool. They will be able to utilize the Historical Inventory Trial Balance report immediately. If you had inventory prior to SP2, you must run the wizard.

You can obtain more information about the HITB and the install utility at:
CustomerSource

https://mbs.microsoft.com/customersource/downloads/servicepacks/mdgp10_hitb.htm?printpage=false

Dynamics GP Payroll Tax Changes

Congress’ recent passage of the The American Recovery and Reinvestment Act of 2009 will require changes to Dynamics GP payroll tax tables. The new withholding tables, along with other instructions related to the new tax law, will be incorporated in new Publication 15-T. The IRS asks that employers start using these new tables as soon as possible but not later than April 1. Most workers will see a boost in their take-home pay soon thereafter. Microsoft should be releasing a new round of tax table changes during the week of March 23rd.

Additionally, the Act made changes to COBRA premium tracking changes that allow for certain workers that have lost their jobs to be provided a credit for a portion of their COBRA payments. The COBRA changes and resulting changes to the quarterly federal 941 employer reporting will require a code update for users of Dynamics GP Payroll. The code changes will be in the form of a service pack inclusive of all previous service packs and hot fixes.

This service pack must be installed on all workstations running Dynamics GP. The service pack is currently slated to include fixes for several critical items in manufacturing, inventory, field service and project accounting. The service pack should also be available during the week of March 23rd. The tax table changes can be installed independently from the service pack.

Eliminating the Print Dialog Box

When you print a document in Great Plains, a follow on print dialog box is displayed. If you want to stop this dialog box from printing each time you select a print routine, change the DEX.INI file to the following:

NoPrintDialogs=TRUE

With this change, the print dialog box will no longer be displayed. This change must be made on every workstation where you want the print dialog box not to be shown.

Using GP Macros to Import Data

1. Determine what information is needed to complete the record in Great Plains. Create an Excel spreadsheet of that information. i.e. Vendors that you want to inactivate. Your spreadsheet would be vendors #’s that you want to inactivate.

2. Open the window in Great Plains you want to update. (Vendor Maintenance)

3. You need to record the macro you want to run. Tools->Macro -> Record. It will prompt you to name/save the macro (vendor.mac) Proceed with entering a samples transaction (Put in the vendor #, inactivate the vendor
and save) Go to Tools->Macro->Stop

4. Open your macro file using Microsoft Word. It will open the document and look similar to the attached file named bom.mac.

5. Select Tools -> MailMerge function within Word and follow the wizard.
a. .Main Document select Create ->Form Letters -> Active Window
b. Get Data – Go – Open Data and select your file you created in step 1. remember that it is an Excel file. You will get a message that no fields match – Select Edit Main Document
c. Your original .mac file will be highlighted in red. Select the fields within the single quotes i.e. ‘ “Vendor” ‘ and choose the field you want to populate the data with under Insert Merge Field button.
d. After all the fields are populated Select Merge
e. Merge to new document and select enter
f. Save your file as .txt and name it filename.mac (it needs to have the .mac extension) see example attached.

6. Open up window in Great Plains you want to update (vendor Maintenance) Put the cursor on the field that you started recording your macro on and Select Tools->Macro->Run Select the file you created in step 5f and go.

7. The macro will run automatically until finished. You can’t use the computer until it finishes or it will error out. If the macro errors out it will stop on the record you will need to delete the rows prior to the error in order to continue.

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