1. Accounts Payable Implementation Guide
  2. Understanding Calculating Withholding

Understanding Calculating Withholding

When you run the Calculate Withholding program (R04580), the system:

  • Selects voucher pay items with a pay status of % (percentage) (withholding applies).

  • Calculates withholding amounts using the withholding percentage in the supplier master record.

    (Release 9.2 Update) The system uses the value of the Withholding Calculation processing option to determine if the withholding amount should be calculated based on the taxable or gross amount of the voucher. If the processing option is blank, the withholding amount is calculated based on the gross amount. If the processing option is set to 1, the withholding amount is calculated based on the taxable amount.

  • Updates the pay status on the original voucher pay item from % (percentage) to the value that is designated in the processing options.

    If you leave the Pay Status processing option blank, the system assigns the data dictionary value. If that value is blank, the system assigns an A (approved).

  • Creates a negative pay item for the withholding amount with the same payee, pay status, and due date as the original voucher pay item.

    • If you change the default value of the pay status of the original pay item, the system changes the default value of the pay status for the negative pay item.

    • The negative pay item offsets the amount of the original pay item when you process the original and negative pay items for payment.

  • Creates a pay item for the withholding amount using the tax authority in the supplier master record.

    You can override this value with a processing option. When the system creates the new pay item, it does not change the supplier number to the number of the tax authority. Rather, it updates the Payee Number field (data item PYE). The pay item remains associated with the original supplier and the payment is made to the tax authority. The new pay item has the same due date and GL bank account as the original pay item.

  • If you leave the Withholding Pay Status processing option blank, assigns a pay status of H (hold) to the withholding pay item, which enables you to accumulate withholdings and pay them on a periodic basis.

  • Produces a report that either:

    • Lists the new pay items and the pay status of each item.

      PS represents Pay Status on the report.

    • Lists the vouchers that were not released for payment and the error that is associated with each voucher or pay item.

Note: As an alternative to running this batch process, you can automatically calculate withholding when you create payment groups by changing a processing option for the Create Payment Control Groups program. If you do this, verify that the data selection for Create Payment Control Groups does not exclude unposted pay items. If you process only posted pay items, the system processes the original pay item (001) that has been posted, but disregards the negative pay item for withholding because it has not yet been posted.

See Working With Payment Groups.