Precision matters when it comes to payroll taxes. Not only to the decimal point, but also in relation to an employee’s location. Why does location precision matter when it comes to payroll you ask? In many states, if an employee’s work location or resident address aren’t accurate, then it’s possible that incorrect local taxes could be applied to their paycheck, thus subjecting the employer to audits and fines.
Multiple Layers of Validation
In this post, we’re going to evaluate why it’s important to have accurate address normalization and formatting that also utilizes geocoding technology and API integration to state and local data sites.
TaxSync utilizes multiple layers of validation to ensure the most accurate data is returned and used by the SmartTax application. Tax codes vary by state, county and even city limits. In many cases those local boundaries are not defined by city name or zip code. Depending on the state or locality being evaluated, a different set of data values might be required. For states like Maryland and Indiana, the county that the address resides in will determine what local taxes are required. For local jurisdictions, a city tax might be required if the address is within the city boundaries, such as New York City/Yonkers or Kansas City-MO.
Keeping up to date information as it pertains to tax boundaries is a daunting task. PS WebSolution has taken the approach to not try and gather and maintain all this tax information but only the rules, which then integrates in real-time via our TaxSync server to the various organizations, state/local government sites that have the most accurate data. Then using our validation rules, the TaxSync server applies that boundary data to achieve accurate tax code assignments.
For example, we’ll use an address of 7210 Watson Rd, St. Louis, MO 63119 that has ‘St. Louis’ as the city and a valid St. Louis postal code, but it may or may not technically be inside the St. Louis city limits. How would a payroll user determine if an address is within the city limits? Based on the address zip code and address city name (St. Louis), the answer is Yes; however, in our real-world example, it turns out the address isn’t within the actual St. Louis city boundaries, so the correct tax rule is to NOT apply the St. Louis local tax. It’s examples like this that set PS WebSolution TaxSync apart from other services.
The TaxSync and WorkSync API has integration points with a host of state and local data sites. For this St. Louis example, we’ve integrated to the StLouis–Mo.gov API that returns the geo-coded address parameters using tax and utilities data. The PS WebSolution TaxSync & WorkSync rules engine then validates the address and/or geocodes and returns an in-city-limits variable to SmartTax or WorkSync. That variable is then used to apply (or not apply) the correct local tax codes. Pardon the pun, but the data comes directly from the horse’s mouth and in real-time, which ensures you are taxing your employees correctly.
This automation and real-time integration allows the TaxSync server to provide the most accurate data to the SmartTax & WorkSync solutions. For a demo of the SmartTax and the TaxSync server, click the Contact US or Request Demo button links.
By Tyger Vollrath
Tyger Vollrath is the Founder and COO of PS WebSolution. He has over twenty-three years of experience in the PeopleSoft and is a frequent speaker and contributor of HCM content.