GARNISHMENTS IN SAP US PAYROLL

US Garnishments - FAQ's

Q1. What is a Garnishment?

A1. Garnishments are payroll deductions which differ from other types of deductions in that
they are governed by government and judicial rules. They are compulsory for both the
employee and employer. The employer generally is liable for 100% of the amount it fails to
withhold pursuant to a garnishment order and penalties and punitive damages can be imposed
for failure to properly comply with the terms and conditions of an order.

Q2. How is a Garnishment initiated and what is the process?

A2. Generally, an employee experiences financial trouble and a court mandates an order that
stipulates the deduction amount and frequency which is received by the employee's HR
department, the information is then entered into R/3, the amount is deducted when processing
RPCALCU0, the vendor is paid via Third Party Remittance and the employee and vendors are
notified of these deductions through automatically generated letters.

Q3. What types are Garnishments are there?

A3. R/3 handles 5 main categories:
Support (child, spousal, and medical)
Creditor
Federal debts (student loans and administrative wage garnishments (AWG))
Federal and State Tax Levies
Voluntary Garnishments

Q4. What is the difference between Exempt and Non-Exempt amounts?

A4. The exempt amount is the amount which cannot be taken to satisfy a garnishment and the
non-exempt amount is the amount that can be taken.

Q5. How is the exempt and non-exempt amounts calculated?

A5. Various rules apply based on the type and priority of the garnishment. There are Federal
and State rules and the state rules will vary from state to state.

Q6. What if an employee has multiple Garnishments?

A6. Garnishments are processed based on priority rules. Generally, child support orders have
the highest priority, Federal Tax Levies have the second highest priority and then other types of
garnishments are on a first come, first serve basis.

Infotypes

Q7. What infotypes are used within R/3?

A7. There are three infotypes designated for garnishment processing.
IT0194 - Garnishment Document
IT0195 - Garnishment Order
IT0216 - Adjustments
The document information is entered on IT0194 and the actual deduction amount and
frequency is entered on IT0195. The two infotypes are linked via a system generated internal
number and you can have multiple orders (IT0195) for one document (IT0194) and these are
linked via a system generated sequence number. Infotypes 0195 and 0216 can only be created
once an IT0194 record has been created and saved. For processing purposes, RPCALCU0 reads
IT0195.

Q8. How do I make changes to an existing Garnishment Order (IT0195)?

A8. With Edit -> Copy, you can make changes to the Order, but keep the same sequence number
and maintain a history in the system. With selecting Change, you can make changes but no
history is maintained. Also, a change can be made through creating a new IT0195 which
maintains history, however a new sequence number is generated and the order is now
processed as a separate order in R/3 and does not cumulate as part of the original
order. IT0195 should always be accessed via IT0194 when making changes.

Q9. When should I use the Adjustment IT0216?

A9. IT0216 should be used to correct errors in RPCALCU0; additional deductions are required; to
enter a new balance; refund from vendor; exceptional payments; separate calculation; calculate
end date; or stopped vendor payment.

Customizing

Q10. What are the relevant tables for Garnishment Processing?

A10. T5UG0 - Garnishment Order Types
T5UG1 - Garnishment Categories
T5UG2 - Adjustments to the Disposable Net
T5UG3 - Model for the Non-exempt amount
T5UG4 - Rules for calculation of Non-exempt amount
T5UG5 - Model Key and Text for Adjustments to the Disposable Net
T5UG6 - Government Rules for Service Charges
T5UG7 - Government Rules for 3PR
T5UG8 - Company Rules for 3PR
T5UG9 - Garnishment Default Values
T5UGA & T5UGB - Special Rules for the Calculation of the Non-exempt amount
T5UGA - Rule Key/Names & Texts for special variables to display on IT0195 screen
T5UGB - Sequence of Operations to be performed
T5UGC - Service Chg Rule Key and Text for Country/State/Document category combination
T5UGD - Levy Form - Filing Status listed
T5UGE & T5UGF - Levy Form - Exempt amount and additional exempt amount for each
filing status
T5UGG - Company Rules for Service Charges
T5UGH - Levy Form - Forms Defined
T5UGI - Letters - Select Form & User exit for letter type
T5UGJ & T5UGK - Not Customizing Tables, used for the Printing Request for the Notice and
Answer Letters
T5UGL - Letters - Definition & location of user exit
T5UGM - Garnishment Originator on IT0194
Payroll Processing

Q11. What are the wage types associated with Garnishments?

A11. /G00 - Disposable Net
/G01 - Gross for Garnishment
/G02 - Completely Non-exempt
/G03 - Garnishment Total Amount Deducted
MG10 trough MG70 delivered templates for Garnishments to be taken

Q12. What are the Garnishment Cluster Tables and what do they represent?
A12. GRDOC - corresponds to garnishment document (IT0194)
GRORD - corresponds to garnishment order (IT0195) or garnishment adjustment (IT0216)
GRREC - actual deductions and wage types and also used to carry forward results

Q13. Where are garnishments calculated in RPCALCU0?

A13. Garnishments are processed via the schema UGRN following the calculation of taxes
(UTX0). The actual amount to be taken is calculated with the function UGARN.

Q14. What is the main garnishment Include?

A14. The main garnishment include is RPCPIUU0 - forms called by UGARN. Also of importance
is RPCPIUF0 - function UGARN.

Quick Tips for Troubleshooting Garnishment Processing

Q1. What are some items to check when troubleshooting Garnishment Processing in R/3?
A1: Review the following:

 On IT0194, check the validity dates, determine what kind of garnishment, how many are
involved and the status of the garnishment (e.g. active, pending).

 Check the IT0195 validity dates and note the Remit Rule, deduction amount, frequency
and how many IT0195's are involved.

 Review RPCLSTRU and the payroll dates in question, keep in mind the information found
on IT0195 and the Garnishable period is from the beginning of the pay period to the
actual check date. Garnishments are deducted based on the check date.

 Within the EE's results, also check for wage types /G00, /G01, /G02 and /G03 and the
wage type for the garnishment to see how much was deducted.

 Still within the EE's results, review the GRORD record and check the limit, disposable net,
month to date, deduction to vendor (DEVEN) and the deduction from infotype (DEINF).

 Multiple garnishment processing, be sure the system can legally take all the
garnishments.

 Check schema UGRN for any customer modifications.

 Double check that Notes have been applied correctly and completely.
  Review the Garnishment History either via IT0194 or IT0195 which lists the actual
deductions taken with the check date.

 Also via IT0194 or IT0195, you can view Customizing details (Environment -> Customizing
details; 4.6C Extras -> Customizing Review)

 Both the Disposable Net and calculated Net Pay should be the same.

Q2. Why was an IT0216 record not processed?

A2. IT0216 can be edited or deleted before running payroll. If payroll is run and there is no
wage type listed on IT0216, this record will not be read nor will it be posted to FI.

Q3. Why does a deduction occur after the initial balance has been met?
A3. It is most likely misconfiguration of the Order Category (table T5UG0). Usually, it is a State
Levy that has been given the Order Category of a Federal Levy. A State Levy should have the
Order Category '3' for Generic in table T5UG0. The order category '2' Levy only applies to a
Federal Levy. Also, a Federal Levy will not stop when an initial balance is reached because by
law, it can only be manually stopped by changing the status of IT0194 to '4' Released, once the
company has received Form 668-D from the IRS. (Please Review Related Note 521735.)

Q4. How is General Disposable Net calculated?

A4. There are two ways to calculate general Disposable Net (/G00).Either start with the gross
amount (/101) and subtract exempt amount or start with 0 and add up all the earning wage
types to be included (e.g. M003). This is configured via PRCL 59, double check the values for the
wage types in question for this PRCL. A useful tool for checking Processing Classes for wage
types is program RPDLGA20 (choose the Output radio button 'Tree Structure').

Q5. How are garnishments and Arrears handled?

A5. Garnishments do not follow the same Arrears principles as other deductions. The arrears
functionality for garnishments only refers to deductions within a particular month. If the total
amount of a garnishment cannot be taken for the month, the remaining amount does not carry
forward to the next month. The values for Arrears processing are set in table T51P6 and for all
garnishment wage types, the value for Arrears should be a '4' and the Retro column should be
blank in this table.(Please see Note 338841.)

Q6. Can Garnishment wage types be entered on a NAMC (IT0221)?

A6. No, Garnishment wage types cannot be entered on IT0221.There is a V0 split indicator that
connects garnishment Wage types to garnishment tables and there is no V0 split on IT0221.

Q7. How are garnishmnents handled during Retroactive Accounting?

A7. Garnishments will not recalculate in a retrocalculation. The amount originally deducted
continues to be carried forward. Consequently, no retroactive changes should be performed for
garnishments. If changes need to be made, perform an EDIT - >COPY operation that will result
in delimiting the IT0195 record.

Q8. What do I check for priority issues; double, incorrect or missing deductions?
A8. First check IT0194 and IT0195 and their validity dates and priority. Make sure the Rule in
IT0195 was customized to do what is expected. Look at the Disposable Net and Non-exempt
models.
Q9. What should I check if Payroll Abends within UGARN?
A9. Check the payroll results GRREC for a record without a wage type.

Q10. Is it possible to specify a percentage or portion of a wage type?

A10. At this time, the garnishment module does not offer a functionality that would allow
specifying a percentage and/or portion of a wage type to be deducted other than from gross
and net. The workaround is to create a special rule with the garnishment orders having
different priorities and different IT0194 records.
FEDERAL WAGE GARNISHMENT LAW

What is wage garnishment?

Wage garnishment is a legal procedure through which earnings of an individual are required to
be withheld by an employer for the payment of a debt. Most garnishments are made by court
order.

Which federal law regulates wage garnishment?

Title III of the Consumer Credit Protection Act limits the amount of an employee's earnings
which may be garnished and protects an employee from being fired if pay is garnish-ed for one
debt. This law is administered by the Wage and Hour Division of the Department of Labor's
Employment Standards Administration.

To whom does the law apply?

The law protects everyone receiving personal earnings, i.e., wages, salaries, commissions,
bonuses, or income including earnings from a pension or retirement program. Tips are not
considered earnings for the purposes of the wage garnishment law.
The law does not affect voluntary wage assignments - that is, situations in which workers
voluntarily agree that their employers may turn over some specified amount of their earnings to
a creditor or creditors.
The law applies in all 50 states, the District of Columbia, Puerto Rico, and all U.S. territories and
possessions.

What is the protection against discharge when wages are being garnished?

The law prohibits an employer from firing a worker whose earnings have been subject to
garnishment for any one debt, regardless of the number of levies made or proceedings brought
to collect it. The law does not prohibit discharge if the employee's earnings have been
garnished for second or subsequent debts.

What are the restrictions on wage garnishment?

The amount of pay subject to garnishment is based on an employee's "disposable earnings"

which is the amount left after legally required deductions have been made for federal, state,
and local taxes, Social Security, unemployment insurance, and State employee retirement
systems.
Other deductions, such as those for union dues, health and life insurance, contributions to
charitable causes, voluntary wage assignments, purchases of savings bonds, and payments to
employers for payroll advances or purchases of merchandise, are not required by law and may
not be subtracted from gross earnings when calculating the amount of disposable earnings.
The law sets the maximum amount which may be garnished in any workweek or pay period,
regardless of the number of garnishment orders received by the employer. The amount may
not exceed the lesser of two figures:

25 percent of the employee's disposable earnings, or the amount by which an employee's

disposable earnings for the workweek are greater than 30 times the federal minimum wage
(now $4.25 an hour).

For illustration, if the pay period is weekly and disposable earnings are $127.50 or less there can
be no garnishment. If disposable earnings are more than $127.50 but less than $170, the
amount above $127.50 can be garnished. If disposable income earnings are $170 or more, a
maximum of 25 percent can be garnished. When pay periods cover more than one week,
multiples of the weekly restrictions must be used to calculate the maximum amounts that may
be garnished.

What about child support and alimony?

Specific restrictions apply to court orders for child support or alimony. The garnishment law
allows up to 50 percent of a worker's disposable earnings to be garnished if the worker is
supporting another spouse or child, and up to 60 percent for a worker who is not. An additional
5 percent may be garnished for support payments more than 12 weeks in arrears.

Are there any exceptions to the law?

The wage garnishment law specifies that garnishment restrictions do not apply to bankruptcy
court orders and debts due for federal or state taxes.
If a state wage garnishment law differs from the federal law, the law resulting in the smaller
garnishment must be observed.

For more information about the federal wage garnishment law...

Contact the nearest office of the Wage and Hour Division, listed in most telephone directories
under U.S. Government, Department of Labor, Employment Standards Administration.
This is one of a series of fact sheets highlighting U.S. Department of Labor Programs. It is
intended as a general description only and does not carry the force of legal opinion.
Tax Wage Types

Purpose

This document provides basic information about WT configuration for tax calculation and output
technical wage types.

Overview

US payroll will perform tax calculation (payroll function USTAX) accordingly to the configuration
of each wage type assigned to each employee. The tax calculation process outputs are used to
fill technical wage types and, later, the cluster tables.

A. User-defined tax wage types

Tax wage types are defined by Processing Class 68, 69, and 71:
PRCL 68 - determines the tax method
PRCL 69 - defines if it is an earning or deduction
PRCL 71 - indicates the tax class (customer-defined)

Fig. 1 Screenshot of tcode SM30 view V_512W_O: wage type M003 processing class
configuration

Taxable earnings

PRCL 68 must be set to one of the following 6 values:

* 1 - regular
* 2 - supplemental
* 3 - cumulative
* 4 - vacation
* 5 - gross-up regular
* 6 - gross-up supplemental
(BSI only allows for these types of taxable earnings)

PRCL 69 must be set to:

* 1 - taxable earning

PRCL 71 must be set to:

* one tax class based on the tax model

B. SAP technical tax wage types

Most commonly used:

/3xx - total gross earnings (w/o deductions)
/4xx - tax amount (returned from BSI)
/6xx - gross earnings (w/ deductions)
/7xx - taxed earnings (returned from BSI)

Other technical wage types:

/Qxx - taxable not taxed
/Nxx - tax not taken
/Ixx - deductions not applied

/3xx - Gross earnings:

Total gross earnings not including any pre-tax deduction.
Example:
Salary : $1,000
401K pre-tax deduction : $ 200
/3xx : $ 1,000

/4xx – Tax amount

Tax calculated and returned by BSI

/6xx – Taxable earnings:

Gross earnings less pre-tax deduction amount.
Amount passed to BSI for tax calculation.
Example:
Salary : $1,000
401K pre-tax deduction : $ 200
/6xx : $ 800

/7xx Taxes earnings

Taxed earnings returned by BSI.
Reportable earnings amount.
Example:
/603 EE FICA : $10,000
YTD /603 : $80,000
FICA ceiling : $87,000
/703 : $7,000

/Qxx – Taxable but not taxed

Any reportable amount from which no taxes are withheld.
PRCL 69 = 3
Usually used for assessments of non-cash benefits.
Example:
Use of company car : $500 (assessed value)
/4xx : $0
/Qxx : $500

/Nxx – Tax note taken

Tax calculated but not able to be taken (not enough cash).
These wage types are built in payroll function UTPRI and depend upon settings in table T5US0
and T51P1.

/Ixx – Pre-tax deductions not taken

Result of pre-tax deductions exceeding taxable earnings.
/Ixx stores the amount that would have been reduced if taxable earnings existed to be reduced.
Example:
Vacation Payout : $1,000.00
Medical deduction : $100.00
Fed: 01 (FIT) : 1000 - 100 = 900
03 (EE FICA) : 1000 - 100 = 900
CA: 01 (SIT) : 1000 - 100 = 900
41 (SDI) : 0 - 100 = -100 à moved into /I41 $100
/Ixx holds a taxable deduction that has not been used for the EE's benefit.

SAP US Payroll Year End Preparation Checklist:

This Wiki represents the various activities that need to be performed for the US payroll year
end.

Purpose:

The purpose of this page is to present the list of activities that need to be performed during the
US payroll year end.

Overview:

The Year end Preparation is a joint effort by the Business and the SAP IT team.List represents an
overview of activities to be performed by each on of them.

The main things to keep in mind are: Year-end payroll and tax filing schedule, calendar extends
correctly into the next year, user training for 221(payroll adjustment), tax configuration for
upcoming year, etc.
Roles and Responsibilities

SAP IT Team

 Update your SAP payroll calendar and check dates for the upcoming year.
 Update Federal IRS Garnishment Levy (Publication 1494) information in SAP. This will be
delivered in an OSS note or you can make the changes manually.
 Update SAP for all changes affecting Year End Tax reporting.
 Update any deduction and payment models.
 Update posting dates for upcoming year.
 Update all dates associated with month end accruals for upcoming year.
 Install required HR Support Packages (HRSPs), up to and including the Year End Base
depending on your release of SAP.
 Review all the key OSS notes to see if they need to be applied based on your business
requirements.

Payroll Business

 Clear all outstanding claims prior to last payroll of the year.

 Review uncollected taxes (/Nxx wagetypes) and take required steps, if desired, to
resolve them.
 Update any company specific state unemployment rates and wage base for upcoming
year.
 Review W-4 exemptions and W-5's.
 Review reconciliations between GL and Payroll to make sure tax accounts are in balance.
 Make sure you keep current on any SAP and BSI TUBS that have key changes for
upcoming year.

The Year end checklist

The following checklist presents the list of activities to be performed and a timeline of
milestones that we need to observe for Year End payroll processing for US payroll.

During November, we can plan to complete the following milestones if they have not already
been completed earlier in the year:

 Refresh your test client with all current Master Data and Customizing found in your
production client.
 Install all required HR Support Packages (HRSPs), up to and including the Year End Base
HRSP defined for your release.
 Apply Year End Transports (or equivalent HRSPs) when necessary.
 Entering Year End Adjustments. To this avoid undesired claims from being stored in
your system, identify a time window when FICA-taxable adjustments can be entered
before the final payroll run of the year.
 Reminding employees to update their mailing address, W-4 or EIC W-5 data, and any W-
2 contact information.
 Performing and auditing Tax Reporter simulation runs.
 Performing Payroll Reconciliations.Performing and auditing Tax Reporter production run.
 Printing results from Tax Reporter production run.
Before performing your final payroll run of the year, please follow the following:

 Apply Year End Transports (or equivalent HRSPs) when necessary.

 Review the configuration information of the Tax Reporter and complete Tax Reporter
configuration for the following items:

o W-2 boxes 11 through 14

o Company information, blocking factor, download format for data files
o Features UTXTM, UTXRP, UTXPR and UTXJS

 Before running your first payroll run of the New Year, identify and clear all existing
claims from the current tax year.
 Perform W-2 simulation runs for small employee groups.
 Use the Payroll Reconciliation Report to compare payroll results with simulated Tax
Reporter data.
 Apply all applicable Tax Update Bulletins (TUBs) for BSI TaxFactory.
 Perform test runs of the full W-2 production process.

o If using a test client with a copy of production data, consider performing a

production Tax Reporter run in the test client.
o Estimate the necessary Tax Reporter runtime on the production server.
o Ensure that no system time-outs occur.
o Print some W-2s to confirm printer setup, authorizations, and alignment.

Simulate and perform your first payroll run for the new year.

 Identify and process all prior-year adjustments.

 Perform Tax Reporter simulation runs.
 Use the Payroll Reconciliation Report to verify the accuracy of your simulation run
results.
 Perform any necessary Tax Reporter configuration changes.
 Perform your Tax Reporter production run and validate the outputs.
 Print and distribute all year-end tax report forms.

o Inform the SAP Year End Support team that you have successfully completed W-
2 Production.
o File year-end forms with federal, state and local tax authorities.
o Issue and file any last-minute correction year-end forms.

Test W-2 Post-Filing Run functionality in the following areas

§ W-2 Post Filing

§ Corrections

§ Reprints

§ Reissues
Technical Wage Types generated in USA Payroll

All technical wage types start with a slash.

For the US Tax Wage Types:

/3xx - total gross earnings (w/o deductions)

/4xx - tax amount (returned from BSI)

/6xx - gross earnings (w/ deductions)

/7xx - taxed earnings (returned from BSI)

xx = Tax Type

The valid tax types vary by tax authority and are shown below.

01 Withholding Tax

02 Earned Income Credit Payment

03 Employee Social Security Tax

04 Employer Social Security Tax

05 Employee Medicare Tax

06 Employer Medicare Tax

07 State Unemployment Insurance Tax

08 Social Charge Tax

09 Employer Special Payroll Tax

10 Employer Unemployment Tax

11 Employer Debt Repayment Tax

12 Employer Old Fund Liability Tx

13 Er Emplmt Security Enhancmt Tx

14 Er Re-emplmt Placemt Tx

15 Er Job Devmt Assessmt Tx

16 Employment Training Tax

17 Employer Health Insurance Tax

18 Employer Workforce Devlmt Tx

19 Payroll Expense Tax

20 Employee Unemployment Tax

21 Employee Debt Repayment Tax

22 Employee Old Fund Liability Tx

23 Employee Health Insurance Tax

24 Employee Workforce Devlpmt Tx

25 Ee Combined Ui/wf&swf/hc/di Tax

26 Employee Chauffeurs License Fee

27 Employer Chauffeurs License Fee

28 Er Combined Wf&swf/hc/di Tax

29 Special Admin Reserve Fund Tax

30 Employer Worker Compensation Tax

31 Employer Disability Tax

32 Employer Accident Fund Tax

33 Employer Medical Aid Fund Tax

34 Employer Suplmtal Pension Tx

35 Transit District Excise Tax

36 Workforce Enhancement Fee

37 Administrative Contingency Fund Tax

38 Employer Investment Fee

39 Employment Administration Fund

40 Employee Worker Compensation Tax

41 Employee Disability Tax

42 Employee Suplmtal Pension Tx

43 Employee Medical Aid Fund Tax

44 Ee Sen Cit/mntal Hlt/retard Tx

45 Employee Senior Citizen Tax

46 Employee Mental Health Tax

47 Joint Economic Dev. District

48 Employee Voluntary Disability Tax

49 Ee Sen Cit/mntal Hlt/transp Tx

50 Employee Transportation Tax

51 Employee Occupation Tax

52 Employer Head Tax

53 Employee School Tax

54 Employer Occupation Tax

55 Employee Railroad Rtmt Tier1 Soc S

56 Employee Railroad Rtmt Tier2 Soc S

57 Employer Railroad Rtmt Tier1 Soc S

58 Employer Railroad Rtmt Tier2 Soc S

59 Employee Railroad Rtmt Tier1 Medic

60 Employer Railroad Rtmt Tier1 Medic

61 Employee Retirement Plan-S.S

62 Employee Retirement Plan-Med.

63 Employer Retirement Plan-S.S

64 Employer Retirement Plan-Med.

65 Employer Supplemental Railroad Rtmt

68 P.E.R.S. S.S. ER Pickup

69 P.E.R.S. MED. ER Pickup

70 Pension Periodic Withholding

71 Pension N.P. Eligible Rollover

72 Pension N.P. Nonqualifying

73 Premature Dist From Qualified Plans

75 Job Development Fee

76 City Service Fee

77 Employer Voluntary Disability Tax

78 Unemployment Surcharge Tax

79 Wage And Salary Tax

80 Employer Wage Security Fund Tax

81 Disability Insurance Vp Asment Tax

82 Unemployment Solvency Tax Surcharge

84 Local Services Tax

85 Competitiveness Skills Schlr Fund

86 Ee Job Devmt Assessmt Tx

87 Employee Family Leave Insurance Tax

88 Employee Family Leave Ins-vol Tax

89 Ui Interest Assessment Fee