Processing liability adjustments

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For payroll compliance (annually licensed)

To ensure that the amounts of liabilities for tax agents match the amounts calculated on tax forms during payroll tax form processing, the application notifies you when there are differences and allows you to make the appropriate adjustment. This process may be a necessary step if you process certain forms with a filing method of Electronic/Internet/Magnetic with payment.

When you process your client's payroll tax forms, either from the Actions > Process Payroll Tax Forms screen or the Process Client Forms dialog from the Actions > Edit Payroll Tax Forms screen and you click the Process Selected button, the application displays a diagnostic report listing the clients' forms that require adjustments to match liability amounts. To make the appropriate adjustments, follow these steps.

  1. Click the Process Adjustments button to open the Process Liability Adjustments dialog. The dialog displays a list of client IDs, the forms requiring adjustments to cover liabilities, the associated tax types and descriptions, and the amounts of the differences. You can click the plus sign next to each row to view the taxable wages, balance due, open liabilities, and (if applicable) the SUI rate for the client.


    • For Federal Form 940 and Vermont Form C-101, the dialog may display two adjustments to account for both a Credit Reduction (Form 940) and a Health Care Contribution (Form C-101) liability adjustment.
    • For payroll consolidation groups - The grid may display adjustments for both primary and secondary clients in the group. If an adjustment applies to the group as a whole, you can assign it to any client in the group by selecting the client ID in the ID field.
  2. If you want to print a detailed report of the liability adjustments for your records, click the Preview Report button in the bottom left corner of the dialog and then click the Print All Reports button at the top of the Print Preview screen.
  3. If you do not want to create a liability adjustment for a particular form, mark the checkbox in the Do Not Create column. Leave the checkbox unmarked if you want the application to create the adjustment.
  4. Mark or unmark the Write Off checkbox if appropriate.

    Note: The Write Off checkbox is available only if the tax agent associated with this adjustment is set up to be funded. The checkbox is marked by default if the adjustment amount is less than the write-off threshold amount specified for the impound bank account used for funding. (This threshold amount is set up using the Form adjustment write-off threshold field on the Main tab of the Setup > Firm Information > Impound Bank Accounts screen). Adjustments that are marked as a write-off will still be paid or deposited by the impound bank account, but the fund will not be available to process from the Funding dialog. The firm treats them as write-offs. If the adjustment amount is more than the threshold amount, the checkbox will be unmarked by default. 

  5. For adjustments associated with a payroll consolidation group - If it's necessary to assign the adjustment to a different client in the payroll consolidation group, select the client ID in the ID field.
  6. Click the Process button to make the appropriate adjustments.

Note: The diagnostic report and the Process Liability Adjustments dialog will not appear if the Do Not Create Tax Liabilities checkbox is marked in the Taxes section of the Setup > Clients > Payroll Taxes tab .

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