Understanding Tax Area Information Assignment Using the GeoCoder
To calculate employee payroll taxes correctly, each employee is assigned a tax area, also known as a GeoCode, for their work location and their residence. You can use the GeoCoder to automatically assign a GeoCode to each employee work tax area and residence tax area. You can also use the GeoCoder to assign a GeoCode to the payroll tax area for each business unit in your organization automatically.
The GeoCoder uses the employee address, city, state, province (if applicable), and postal code to determine which GeoCode to use for the employee's residence tax area. The GeoCoder uses the GeoCode that is assigned to the employee home business unit to populate the employee work tax area. You can set up the GeoCoder to assign tax area information interactively, or you can process batch versions of the GeoCoder to assign tax area information to groups of employees or business units simultaneously.
A Vertex compression capability can also be used in combination with the GeoCoder to improve the ability of the system to recognize many city names that contain abbreviated words and phonetic misspellings. You activate this feature by selecting the Quantum City Compression option in the Quantum Sales and Use Tax Constants program (P7306).
If you assign tax areas using batch processes, to ensure that the correct GeoCode is used for each employee's work tax area, you should run the Cost Center Tax Area Processing program (R079052) before you process the GeoCoder Employee Batch Processing program (R070103). The R079052 program assigns a GeoCode to each cost center, or business unit, using the address, city, state, and postal code for each cost center. The system then uses this GeoCode value for the employee work tax area when you run the R070103 program. You might want to run each of these programs before each payroll cycle to ensure that all employee payroll history is updated to the correct tax area.
You can also use the GeoCoder to assign tax area information when an employee's address is changed using self-service.