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CLEARING CLAIMS FROM SAP PAYROLL

INTRODUCTION ........................................................................................................................................ 2 WHAT IS A CLAIM? .................................................................................................................................. 3 CLAIMS AND RETROCALCULATION .............................................................................................................. 3 GENERATING /561 (CLAIM) AMOUNTS ........................................................................................................ 4 THE CLAIMS REPORT (RPCLMSU0).................................................................................................... 5 CONFIGURATION AND INFOTYPES.................................................................................................... 7 WAGE TYPES AND POSTING ......................................................................................................................... 8 Claim forgiveness (MFTx)...................................................................................................................... 8 Clear claim (MRPx) ............................................................................................................................. 10 Periodic Repayment (MPx0, MPx1, MPx2).......................................................................................... 12 OTHER WAGE TYPES .................................................................................................................................. 13 Nontaxable cash reimbursement........................................................................................................... 13 Nontaxable deduction (MDRC) ............................................................................................................ 13 INFOTYPES ................................................................................................................................................ 14 Infotype 0267 ........................................................................................................................................ 14 Infotype 0221 ........................................................................................................................................ 14 Infotypes 0014/0015 ............................................................................................................................. 14 CLAIM CLEARING/FORGIVENESS WAGE TYPES AND GARNISHMENTS ....................................................... 14 PROCEDURES FOR CLEARING CLAIMS.......................................................................................... 15 TOTAL FORGIVENESS ................................................................................................................................. 16 TOTAL REPAYMENT ................................................................................................................................... 17 PARTIAL FORGIVENESS .............................................................................................................................. 18 CLAIMS CROSSING YEARS......................................................................................................................... 18 GUIDE FOR CLEARING CLAIMS ........................................................................................................ 19

Introduction A claim is an amount that an employee owes an employer due to an overpayment. SAP Payroll can automatically track overpayments and recover those amounts in future pay periods. However, there are some cases where the claim must be processed manually. The two major cases that necessitate manual processing are the following. 1. The employee has been terminated. 2. The overpayment is large and automatic recovery in subsequent periods would result in little or no net pay for the employee. This document explains how to identify claims in the SAP Payroll system, determine the components of each claim, and clear the claims from Payroll. To make use of the information in this document, you will need a good understanding of the Year End 1999 payroll processing changes described in an earlier U.S. Payroll Notification ("Year End 1999: Payroll Retrocalculation / Payroll Results Tables"). This document can be downloaded either from your local SAPserver (as described in SAP Note 0162171) or from the User guides section of the SAP HR United States website, which is located within the SAP Service Marketplace at http://service.sap.com/HRUSA. This document uses the following icons to indicate specific types of information:

Example
This icon indicates examples of how a function or process works.

Caution
This icon precedes information that warns you of potential problems.

What to do
This icon provides instructions to ensure successful implementation of the enhancement.

What is a Claim? A claim is an amount that the system perceives to be owed by the employee. The amount is stored in wage type /561 (Claim), which is found in the RT table of the employee's payroll results. The system creates an amount in wage type /561 whenever it detects that negative offsets to net pay {represented by wage type /552 (Retro difference), or simply by a large deduction, for example} are greater than statutory net pay for a pay period. Claims and retrocalculation It is important to note that claims are often (but not always) created as the result of a retrocalculation. The system uses three tables to keep track of the taxable wage offset amounts and corresponding wage types: XDFRT in the retro period, and BAL and UNB in the current period. Wage type /561 (Claim) is generated in parallel to the XDFRT/UNB process that determines whether enough money exists upon which to calculate taxes. Whenever a claim represented by wage type /561 exists in table RT of a payroll result, a corresponding entry (or entries) will usually exist in table UNB for that pay period. Wage type /5PY (Good Money) in table RT will always be negative in such a case, preventing the system from calculating taxes. Since taxables and taxes are only calculated when an employee is in a good money situation (that is, when /5PY is a non-negative amount), the claim must be cleared. The system clears claims automatically in subsequent payroll periods if the employee has enough money. However, for business reasons, you may wish to perform one of the following three procedures to clear individual claims from your system: Total forgiveness Total repayment Partial repayment

Each of these options requires a separate procedure, but the underlying principle is the same: eliminate the "overpaid" status for the employee in Payroll, so that you can close your books for the period, and/or continue to pay the employee normally. This document is your guide for carrying out all three procedures to clear employee claims.

Generating /561 (Claim) amounts Technically speaking, the U.S. Payroll Driver (RPCALCU0) creates claims whenever wage type /560 (Amount paid) is less than zero (see rule X060 in subschema UNN0).

Example
The following employee was paid up to period 18.2000, then retroactively terminated as of the end of period 17. An adjustment is subsequently run to take the termination into account. The payroll results are as follows. (For simplicity, we assume that the employee has already reached the OASDI ceiling due to a large bonus at the beginning of the year.)
18.2000/18.2000 * /101 Total gros * /110 EE deducti * /601 TB Withhol FED * /605 TB EE Soci FED * /606 TB ER Soci FED * /610 TB ER Unem NV * /401 TX Withhol FED * /405 TX EE Medi FED * /406 TX ER Medi FED * /410 TX ER Unem TX * /560 Amount pai * /5PY Good Money * /5U0 Tot EE tax 2 M003 Salary * BE10 Medical 1 18.2000/00.0000 (B) * /101 Total gros * /110 EE deducti * /601 TB Withhol FED * /605 TB EE Soci FED * /606 TB ER Soci FED * /610 TB ER Unem NV * /401 TX Withhol FED * /405 TX EE Medi FED * /406 TX ER Medi FED * /410 TX ER Unem TX * /551 Retrocalc. * /560 Amount pai * /561 Claim * /5PY Good Money * /5U0 Tot EE tax 2 M003 Salary * BE10 Medical 1 0 200800 800 800 800 88.40 11.60 11.60 21.60 700 700 300 1000 100 0 2001000 200800 800 800 800 88.40 11.60 11.60 21.60 700 1000 100 1000 20000.0000/00.0000 (B) * /102 Actual Ben * /110 EE deducti * /552 Difference * /561 Claim * /563 Claim from * /5PY Good Money * /5UB Tax base w * /Z02 Inflow(/10 * BE10 Medical 1 1000200 700 800 300 10001000 1000200

In this case, the two most important wage types are the following: /561 Claim, and /5PY Good Money.

Since /561 exists, you know that the employee has a claim. Also, since /5PY is negative, you know that entries most likely exist in table UNB for this period. You know that you have to clear wage type /561 in order to clear the claim from payroll. If this were an active employee, you may choose to continue paying the employee normally, as if no money were owed, so you would also need to clear wage type /5PY before proceeding. To find out which payments must be adjusted to clear these claims, you need to know which payments make up the individual components of the claim. This information is provided in the output of the Claims Report (RPCLMSU0). The Claims Report (RPCLMSU0) The Claims Report is the most extensive tool available for investigating how a claim was created. You use it to identify existing claims. It also provides the following information for each claim: General claim information: /561 (Claim) amount /5PY (Good Money) amount Component breakdown - deltas: Overpaid wages Overpaid taxes Component breakdown original period amounts: Pre-tax deductions Post-tax deductions Knowledge of these amounts is critical for payroll administrators to decide which amounts should be repaid by the employee, such as overpaid wages, and which can or must be forgiven, such as pre-tax 401(k) deductions. In this document, we refer to overpaid amounts that the employer has chosen to write off as forgiven amounts; we refer to overpaid amounts where the employer expects repayment from the employee as repayment amounts. When payroll administrators encounter a claim, they have three options by which to proceed. The first option, total forgiveness, means that the administrator has decided to write off all overpaid amounts. The second option, total repayment, means that no overpaid amounts will be written off; rather, the employee must repay them. The third option, partial repayment, is pursued when the administrator decides to write off some of the overpaid amounts, but not others.

The output of the Claims Report displays the difference between what taxes were taken and what taxes should have been taken. In the case of deductions, the Claims Report provides the original deduction amount, because in many cases, remitted deductions are unrecoverable, so the original deduction amount is more useful than a delta. The Claims Report, however, does not report any component deltas for claims generated in a prior year; this is a consequence of the claim of right rule. Please see the Claims Crossing Years section for details.

Example
The following screen shows the output of the Claims Report (RPCLMSU0) for the above example. When this report identifies a claim, it starts a background payroll run with a special schema to determine overpaid wage and tax amounts; for more information on this process, review the following section of the U.S. Payroll IMG: Reporting Claims Processing. You can identify claims using the Claims Report or by using the Payroll Reconciliation Report (RPCPRRU0) to find /561 (Claim) amounts in the most recent payroll results that exist for an employee.

What to do
Once you have run the Claims Report and broken down the components of the claim, you have all the information you need to perform the Total forgiveness, Total repayment or Partial repayment procedures, provided that you have decided which procedure to apply to which claims. Configuration and Infotypes The three procedures for clearing claims (total forgiveness, total repayment, or partial repayment) require the use of a number of customer-specific wage types. These wage types are used to clear table UNB, to represent repayment/forgiveness amounts on Infotype 0267, and to reset taxable wage amounts, tax amounts, and loan and balance amounts for both repayment scenarios. This section of the document lists some of these wage types; it explains how they should be created and how they should be used to clear outstanding claims. It also lists the infotypes used in claims clearing.
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Wage types and posting In order to ensure that claims are reduced and/or eliminated from Financial Accounting, you must make specific configurations for your clearing and forgiveness wage types. To this end, SAP provides the following model wage types: MFT1 MRP1 MDRC MPx0 MPx1 MPx2 Claim Forgiveness Claim Repayment Deduction Recovery Periodic Claim Repayment for payment plan Total Claim Amount (Balance) Claim Repayment Accumulation

Caution
When you copy these wage types to the customer name range, you may need to create several versions of each wage type. When clearing claims, it is necessary to ensure that the wage type used to clear and/or recover the claim has the same taxability as the original overpaid wage type. Therefore, with the exception of MDRC, you will need one set of each of the above wage types for each processing class (PRCL) 71 specification that may have overpayments. These wage types may also need to be supplemented with additional pre-tax deduction recovery wage types, as described in SAP Note 332601, which has been appended to the end of this document.

Example
For example, if you have PRCL 71 values of 1 for regular, A for 401(k) and B for Pre-tax health, you would need to create wage types such as UFT1, UFTA, UFTB, URP1, URPA, etc. The following provides an overview of the use of each wage type as well as guidance on configuration. Claim forgiveness (MFTx) This taxable cash wage type is used to clear wage types /561 and /5PY by being entered on Infotype 0267. The critical difference between claim clearing (MRPx) and forgiveness (MFTx) wage types is that MFTx wage types are only used in the total forgiveness procedure.

Posting: This wage type should post to a special account for forgiven employee debts, which you may need to create. This is in contrast to the claim clearing wage types, which need to post to the same account as /561 for repayment scenarios.

Example
Consider the first example. The employee had been terminated as of the end of period 17.2000; this had generated a net claim (/561) of $800 and a taxable claim (/5PY) of $1,000; the difference resulted from the refund of a pre-tax medical deduction. The payroll administrators decide to forgive the overpaid amount; they decide, however, to keep the refunded pre-tax deduction. Therefore, they enter MFT1 with 1000 and 1DRC with 200 on Infotype 0267, and then run payroll. The RT of the off-cycle appears as follows.

Note that the net claim wage type /561 and the good money wage type /5PY have both been zeroed out. The forgiveness symbolic account contains $800 (assuming that wage type 1DRC has been configured to post to the forgiveness account); the claims account contains $0. Table UNB is now empty, and the offset(s) have been moved to table BAL, since the offset(s) have now been accounted for. Clear claim (MRPx) These taxable cash wage types are used on Infotype 0267 and Infotype 0221 for the total repayment and forgiveness scenarios; therefore, they must be configured to be permissible for each of these infotypes. When used with Infotype 0267, these wage types offset negative inflows in table BAL and net negative inflows from wage types /552 and /561. They therefore clear both table UNB (bringing /5PY to 0) and wage type /561. Posting: Make sure your claim clearing wage types post to the same symbolic account as /561 (Claim) and /563 (Claim from previous periods).

Example
Let us return to the first example. Suppose the payroll administrators decide to require the employee to repay the entire overpaid amount. The employee owes $800; therefore, the administrators must ensure that $800 remains in the claims account. Entering 800 in MRP1 will not suffice to clear wage type /5PY, while merely entering 1000 in MRP1 will result in a payment to the employee of 200. Thus, the payroll administrators enter 1000 in MRP1 and 200 in 1CBC (where 1CBC is a wage type copy of 1DRC that posts to the claims account). The RT that results from this procedure is pictured below.

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Note the similarity between this result and the forgiveness result; the only real difference is the particular symbolic account to which the claim clearing wage types have been posted. Again, both /561 and /5PY have been zeroed out; table UNB has also been cleared, with the offset(s) moved to table BAL.

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Periodic Repayment (MPx0, MPx1, MPx2) These wage types are used in a claim repayment scenario. When you set up a payment plan for an employee, you are creating the equivalent of a loan. These wage types represent the deduction amount, claim balance (total) and accumulated amount. Like the claim clearing/forgiveness wage types, you need one of these wage types for each tax class you use. The deduction wage type is entered on Infotype 0014, the total wage type on Infotype 0015. The balance wage type is generated during the payroll run. Posting: The deduction wage type must be configured to post to the same account as wage type /561 (Claim). This wage type will reduce the claim in FI when it posts.

Example
Let us modify our first example as follows. Suppose the employee had (retroactively) been put on an unpaid leave of absence at the end of period 17; the employee resumes work at the beginning of period 19. The payroll administrators decide to have the employee repay the $800 using a payment plan. They enter a period deduction of 100 in Infotype 0014 and a balance of 800 in Infotype 0015. For simplicity, we will assume that the retroactive termination of the medical plan was valid. The payroll result for period 19 is as follows.

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Caution
Make sure you configure the deduction wage types as pre-tax deductions. This is necessary because the employee has already paid taxes on the claim. The only exception to this is when you are in a claim of right situation where you are clearing a prior years claim. In this case, the deductions should be post-tax. See the following section for more information on claim of right implications during claims clearing. Other wage types The wage type descriptions above are sufficient for claims in which the /561 and /5PY amounts are equal. In reality, this is not always the case. For cases where the amounts are not equal, two additional wage types are needed. They are as follows: Nontaxable cash reimbursement This can be any wage type, such as an expense reimbursement, that does not increase employee taxable wages. Use this on Infotype 0267 to clear remaining /561 amounts for cases where /561 is greater than /5PY. Posting: These wage types should post to the same account as claims, but as a positive amount. This ensures that the claim is eliminated from Payroll, but not from FI. Nontaxable deduction (MDRC) Use this wage type whenever /5PY is greater than /561. In such cases, you need to enter MRPx in the amount of wage type /5PY to clear table UNB. Wage type /561 is also cleared, but this deduction is needed to prevent the employee from receiving an extra payment from the MRPx amount. Posting: The deduction wage type must be configured to post to the same account as wage type /561. This wage type will reduce the claim in FI when it posts (alternately it can post to a special account for deduction write-off). Refunded pre-tax deductions (1DRC and 1CBC) Consult SAP Note 332601, found at the end of this document, for details. Note that copying MDRC to 1DRC will imply that the deduction posts to the claims account. In the examples above, 1DRC has been reconfigured to post to the forgiveness account, and 1CBC has been configured to post to the claims account.)

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Infotypes In the case of claim repayment, both partial and total, two separate steps and payroll runs are required; total forgiveness involves only one step. The first step is to clear the claim from payroll. Use Infotype 0267 to enter the amounts that are to be repaid by the employee. For the actual repayment, use Infotype 0221 to record a lump sum given to you by the employee or Infotype 0014 to set up a payment plan. Infotype 0267 Use this infotype to enter the taxable cash wage types that will clear your claims. You must use pay type A when creating the claim clearing payment. Do not use regular payroll runs to pick up claim clearing adjustments, as you may pick up other retroactive change amounts. You may use either the claim clearing or claim forgiveness wage types (MRPx/MFTx) to clear claims on Infotype 0267. Infotype 0221 If you are entering a repayment, you need to tell the system to effectively reverse prior payments and deductions. To do this, enter negative amounts for the payments and deductions via subtype ADJT of this infotype. This is the infotype used when the employee returns the overpayment by writing a check. The amounts repaid in the check are entered on Infotype 0221/ADJT. You will use the claim-clearing wage types (MRPx) described below, as well as the regular wage types for adjusting taxes and deductions, to reflect check repayments on Infotype 0221. Infotypes 0014/0015 These infotypes are needed for any scenario in which the employee will be repaying a debt via a loan with balance. SAP Payroll features model wage types for these kinds of advances (see below), and you enter the total loan amount on Infotype 0015 and periodic deduction amount on Infotype 0014. Claim Clearing/Forgiveness Wage Types and Garnishments When configuring claim clearing wage types, you also need to consider the value of processing class 59. This processing class controls a wage types availability for use in the calculation of disposable net amounts from which garnishments can be taken. The setting you make for this processing class depends on the PRCL 59 setting for Total Gross (/101) in your system. The following rules apply for configuring claim clearing/forgiveness wage types:
If PRCL 59 for /101 is set to: 1 (Transfer to disposable net, same sign) 0 (Not used for garnishments) 4 (Used for garnishments) then PRCL 59 in claim clearing wage types must be: 2 (Transfer to disposable net with sign reversed) 0 (Not used for garnishments) 0 (Not used for garnishments) 14

If you do not follow these rules for PRCL 59, claims may not be cleared properly for employees with active garnishments. This assumes that no other settings are used for /101 in PRCL 59. This should always be the case unless the garnishments module has been heavily modified. In this case, claim clearing wage types may need to be determined on a case-bycase basis. Procedures for Clearing Claims You can identify employees with claims by running a report within the system, such as the Payroll Reconciliation Report, that reports any employee with amounts in wage type /561. Once you identify the employees, you can then run the Claims Report for any claims in the current year to identify the data associated with the claim and make the necessary decisions on how to clear it. After the employees are identified, clearing the claim may involve several steps. First, you must decide the appropriate scenario to resolve the claim; there are several scenarios to choose from, including: Total forgiveness Total repayment with payment plan Total repayment with employee check Partial repayment with payment plan Partial repayment with employee check Second, if the employee has deductions or non-taxable cash payments in the claim, there will be a difference in the /5PY and /561 amounts as follows: - Non-taxable cash payments within the claim or a refunded pre-tax deduction that has been forwarded through arrears will result in a /5PY amount that is greater than /561. - Deductions configured to take the total amount regardless of net pay (T51P6 arrears value = 1) within the claim will result in a /5PY amount that is less than /561. It is vital to examine these two wage types, as it will determine how you enter the amounts. You will also need to determine whether you will refund any deductions, e.g. 401(k), or simply write them off with the claim amounts. This decision will also affect how you clear the claims.

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Example
To illustrate how these two wage types can influence claim clearing and determine repayment amounts, consider the following. Whenever a deduction from the employees pay is not configured to be included in arrears processing (T51P6 arrears value = 1), the /5PY amount will be less than the /561 amount. Therefore, when you clear the claim, you will have to decide whether or not to recover the deduction from the vendor, recover it from the employee, or write off the expense incurred when you cleared the claim from payroll. If /5PY is greater than /561, you clear the claim by entering a payment for the /5PY amount, which generates a refund to the employee of the difference between /5PY and /561. See the procedures for clearing claims at the end of this document for further information.

Caution
The procedures for clearing claims involve running payroll for affected employees. In the event that an employee is inactive, you will have to adjust the Run payroll up to date (Infotype 0003) for the employee accordingly in order for payroll to run. Total Forgiveness In this case, you decide that the employee should not repay any overpaid amounts. Instead of leaving a claim in their payroll result, which will cause the system to try to recover the overpayment, you eliminate the claim against the employee from the payroll system and post the forgiven amount to FI. You may clear the claim in one of two ways. The simpler method would be to back out the master data change that caused the claim in the first place. Thus, if the deletion of a $100 bonus resulted in a claim and you wish to forgive that claim, then restoring the $100 bonus will delete the claim from the payroll. This method has a drawback, though, in that you cannot post the forgiven amount to a special account. If you wish to post to such a special account, then you must perform the following steps. a) Identify claim b) Break down claim components using the Claims Report c) Offset claim and /5PY using the claim forgiveness wage type(s) on Infotype 0267.

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Result The claim forgiveness wage type (MFTx, described above) on Infotype 0267 offsets the entries in table UNB, bringing the /5PY amount to 0. They also offset the net reduction caused by wage type /552, clearing the claim amount stored in wage type /561. Wage type /563 is generated in the RT of the Infotype 0267 payroll result; this wage type posts to the same account as /561, and clears the /561 amount from FI. The employees taxable wages are not impacted, and do not need to be adjusted further, because the employee has constructively received the overpayment. Going forward, the system no longer attempts to recover the overpayment amount from the employee, since the /561 and UNB entries no longer exist for the employee. Total Repayment In other cases, you may want the employee to pay back all overpaid wages, overwithheld taxes and deductions. You can arrange for the employee to write you a check for the overpaid amounts, or you can set up a payment plan to recover the amounts through regular payroll deductions. To pursue this scenario, you must perform the following steps: a) b) c) d) e) Identify claim Break down claim components using the Claims Report Determine repayment amount Offset claim and /5PY using the relevant claim clearing wage type(s). Enter receipt of repayment check via Infotype 0221/ADJT, or set up a payment plan to recover the amount to be repaid via Infotype 0014 in subsequent pay periods.

Result In step d) above, claim clearing wage types (as described above) clear both the UNB entries (that is, bringing /5PY to 0) and the claim amount in the net payroll result. The wage types post to the same FI account as wage types /561 and /563. Consequently, the claim continues to exist in the FI system, although it has been cleared from Payroll. When the check receipt is entered as an Infotype 0221/ADJT adjustment, the wage component is entered using the same wage types as the ones used in claim clearing. When these are posted, they will eliminate the claim from the FI system. If a payment plan is used, the deduction wage type used to recover the overpayment from the employee should likewise post to the same account as claims, so that each deduction taken will reduce the remaining claim in FI by the deduction amount.

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Partial Forgiveness There may be cases where a negotiated amount is recovered. In this case, you need to determine which deductions may be refunded and the taxes associated with the actual repayment. To pursue this procedure, perform the following steps: a) b) c) d) Identify claim Break down claim components using the Claims Report Determine forgiveness amount and repayment amount Offset claim and /5PY using a claim forgiveness wage type for the amount to be forgiven e) Offset claim and /5PY using a claim clearing wage type for the amount to be repaid f) Determine taxes associated with the repaid amount, either by using the gross-up function in SAP Payroll or BSI or by estimating the taxes based on the amount repaid as the amounts on the Claims Report. g) Recover repay amount via employee checked entered as an Infotype 0221/ADJT record or via payment plan Result The partial forgiveness scenario is a combination of the techniques described above for claim forgiveness and repayment. Here, the payroll administrator has to decide which components to forgive, and which to repay. The repayment can be done either by check or deduction plan, as in the total repayment scenario described above. Claims Crossing Years If a claim from a prior year still exists in the first period of the following year, the standard system will reduce current period taxable wages in order to recover the overpayment. This is based on the assumption that the majority of prior period reductions are small, and it is not feasible to generate corrected tax forms and W-2 forms in the new year. However, due to claim of right regulations, you should exercise caution when carrying reductions into the new year and adjusting them in the prior year (this will generally apply only to very large repayments). Therefore, as a general rule, you should clear all claims before you cross a year. If you are going to process a repayment for an employee in the following year, use a wage type configured to reduce taxable wages only for those tax types for which such reductions are allowed. The Claim of Right model wage type (MCOR), for example, is set up only to impact FICA taxable wages, since FIT wages cannot be adjusted across the year. It is important to note that the Claims Report will not report any tax deltas when the claim crosses years, since the requirements for handling the Claim of Right differ by tax authority and even tax type. The federal handling of the Claim of Right for FIT wages and FICA wages serves as an example.
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Guide for Clearing Claims The following chart summarizes the instructions from above and guides you through the correct infotypes and amounts to use when clearing claims. It is important to remember that the Repayment scenarios are two-step processes: a payroll must first be run to clear the claim from payroll; the second is then run to process the repayment amounts.
Scenario Forgiveness /561 = /5PY /561 < /5PY Infotype Wage type Amount Comments

IT 0267 IT 0267 IT 0267

MFTx MFTx MDRC 1DRC MFTx MDRC 1DRC

/5PY /5PY See Note 1 below /5PY See Note 1 below

/561 > /5PY

IT 0267 IT 0267

Clears overpayment from payroll Clears overpayment from payroll Clears deductions from payroll Clears overpayment from payroll Clears deductions from payroll. Enter a negative amount (deduction refund).

Full Repayment /561 = /5PY Payment Plan

IT 0267 IT 0014 IT 0015 IT 0267 IT 0221 IT 0221

MRPx MPx0 MPx1 MRPx MRPx Tax wage types (/4xx) MRPx MDRC 1CBC MPx0 MPx1

/5PY Enter amount to be taken with each payroll run /5PY /5PY -/5PY Tax amounts from Claims Report /5PY See Note 1 below Enter amount to be taken with each payroll run /5PY

Check from EE

Clears overpayment from payroll Represents amount to be collected with each payroll run Represents gross repayment Clears overpayment from payroll Represents repayment. Use subtype ADJT; see Note 3 below Represents taxes to be recovered by employer. Enter negative amounts. Clears overpayment from payroll Clears deductions from payroll Represents amount to be collected with each payroll run Represents gross repayment

/561 < /5PY Payment Plan

IT 0267 IT 0267 IT 0014 IT 0015

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Check from EE

IT 0267 IT 0221 IT 0221

MRPx MRPx Tax wage types (/4xx) MRPx MDRC 1CBC MPx0 MPx1 MRPx MDRC 1CBC MRPx Tax wage types (/4xx)

/5PY -/5PY Tax amounts from Claims Report /5PY See Note 1 below Enter amount to be taken with each payroll run /5PY /5PY See Note 1 below -/5PY Tax amounts from Claims Report

Clears overpayment from payroll Represents repayment. Use subtype ADJT; see Note 3 below Represents taxes to be recovered by employer. Enter negative amounts. Clears overpayment from payroll Clears deductions from payroll. Enter a negative amount. Represents amount to be collected with each payroll run Represents gross repayment Clears overpayment from payroll Clears deductions from payroll. Enter a negative amount. Represents repayment. Use subtype ADJT. Represents taxes to be recovered by employer. Enter negative amounts.

/561 > /5PY Payment Plan

IT 0267 IT 0267 IT 0014 IT 0015 IT 0267 IT 0267 IT 0221 IT 0221

Check from EE

Partial Repayment /561 = /5PY IT 0267 Payment Plan IT 0267

MFTx MRPx

Forgiveness Amount Repayment Amount Enter amount to be taken with each payroll run Repayment Amount Forgiveness Amount Repayment Amount

IT 0014 IT 0015 Check from EE IT 0267 IT 0267

MPx0 MPx1 MFTx MRPx

Enter the gross amount to be forgiven Enter the gross amount to be repaid. The total of the Forgiveness and Repayment amounts must equal /5PY. Represents amount to be collected with each payroll run Represents net repayment Enter the GROSS amount to be forgiven Enter the GROSS amount to be repaid. The total of the Forgiveness and Repayment amounts must equal /5PY; see Note 3 below Enter GROSS repayment amount. Use subtype ADJT; see Note 2 below

IT 0221

MRPx

-/5PY

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IT 0221

Tax wage types (/4xx)

Tax amounts associated with Gross Repayment; see Note 2 below Forgiveness Amount Repayment Amount See Note 1 below Enter amount to be taken with each payroll run Repayment Amount Forgiveness Amount Repayment Amount

Represents taxes to be recovered by employer. Enter negative amounts.

/561 < /5PY Payment Plan

IT 0267 IT 0267

MFTx MRPx

IT 0267 IT 0014 IT 0015 Check from EE IT 0267 IT 0267

MDRC 1CBC MPx0 MPx1 MFTx MRPx

Enter the gross amount to be forgiven Enter the gross amount to be repaid. The total of the Forgiveness and Repayment amounts must equal /5PY. Clears deductions from payroll Represents amount to be collected with each payroll run Represents net repayment Enter the gross amount to be forgiven Enter the gross amount to be repaid. The total of the Forgiveness and Repayment amounts must equal /5PY; see Note 3 below Clears deductions from payroll Enter GROSS repayment amount. Use subtype ADJT; see Note 2 below Represents taxes to be recovered by employer. Enter negative amounts.

IT 0267 IT 0221 IT 0221

MDRC 1CBC MRPx Tax wage types (/4xx)

See Note 1 below -/5PY Tax amounts associated with Gross Repayment; see Note 2 below Forgiveness Amount Repayment Amount See Note 1 below Enter amount to be taken with each payroll run Repayment Amount Forgiveness Amount

/561 > /5PY Payment Plan

IT 0267 IT 0267

MFTx MRPx

IT 0267 IT 0014 IT 0015 Check from EE IT 0267

MDRC 1CBC MPx0 MPx1 MFTx

Enter the gross amount to be forgiven Enter the gross amount to be repaid. The total of the Forgiveness and Repayment amounts must equal /5PY. Clears deductions from payroll Represents amount to be collected with each payroll run Represents net repayment Enter the GROSS amount to be forgiven

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IT 0267

MRPx

Repayment Amount

IT 0267 IT 0221 IT 0221

MDRC 1DRC MRPx Tax wage types (/4xx)

See Note 1 below -/5PY Tax amounts associated with Gross Repayment; see Note 2 below

Enter the GROSS amount to be repaid. The total of the Forgiveness and Repayment amounts must equal /5PY; see Note 3 below Clears deductions from payroll Enter GROSS repayment amount. Use subtype ADJT; see Note 2 below Represents taxes to be recovered by employer. Enter negative amounts.

Notes: 1. If outstanding deductions exist, you must determine which of them, if any, should be refunded to the employee. If all deductions are to be written off, simply enter the total amount of the deductions in wage type MDRC on Infotype 0267. Do not use the actual deduction wage types, as these will cause balancing issues in the GL. If you are refunding any deductions, only use wage type MDRC (on Infotype 0267) to reflect those that are written off. By leaving a difference between wage types /561 and /5PY, the system will process the refund. However, you will also need to adjust the accumulations. You can do this via subtype ADJT on Infotype 0221 by entering negative deduction amounts using the actual deduction wage types. If the difference results from the refund of a pre-tax deduction, you will need to offset the refunded pre-tax deduction with a copy of wage type MDRC (such as 1DRC or 1CBC). Please refer to SAP Note 332601, which has been appended to the end of this document. 2. The Claims Report provides you with the net overpayment and the deductions, including taxes, to arrive at the gross. If only part of the claim is to be repaid, you will need to calculate the taxes associated with the repayment. You will also need to determine if any deduction amounts should be refunded. You can use the gross-up function within the system or estimate the taxes associated with the repayment. 3. The employee will give you a check for the net repayment amount, but you must gross up the amount (or estimate it) for this entry. The amount on the check is not entered here.

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R/3 note no. 332601 _______________________________________________________________________ Number Language Short text Component 0332601 EN Additional information when clearing claims in SAP PY-US

Symptom User cannot completely clear a claim using the Claims Clearing documentation provided by SAP Additional key words /5PY, /561, good money, claim, pre-tax deductions Cause and prerequisites The Claims Clearing documentation specifies that wage type MDRC (or a user copy thereof) should be used when /5PY and /561 have differing amounts. This is correct when the difference results from an after-tax wage type that is configured to be taken always; it is not necessarily correct, though, if the difference results from the refund of a pre-tax deduction that has been forwarded through arrears. Consider the following example. Suppose an employee is paid through period 12.2000. The employee is paid $1,000 per pay period; s/he has also arranged to have $20 deducted in each pay period to pay for a medical plan. This deduction is pre-tax, and it is configured in table T51P6 so that any difference is forwarded through arrears. Now, the employee is retroactively terminated as of the end of period 11.2000. When payroll for period 13.2000 is run, it retrocalculates period 12.2000, backs out the wages for period 12.2000 (but not the pre-tax deduction), and it generates a claim in period 13.2000. These results are summarized below. 12/12 taxable wages med ded taxes (/5U0) amt paid (/560) 12/13 taxable wages med ded taxes amt paid 1000 20180 800 0 20180 800 13/13 med ded refund claim (/561) good money (/5PY) 20 980 1000-

The amounts in /5PY and /561 differ because the refund of the deduction acts as a credit against the claim, but not as a credit against good money.

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Solution The only change to the directions given in the Claims Clearing documentation is the specific wage type that should be used in this case. Since it is the refund of a pre-tax deduction that resulted in /5PY and /561 being out-of-sync, a pre-tax deduction recovery wage type is needed to clear the claim. To ensure that all amounts are posted properly, the solution is to copy MDRC to a pre-tax deduction that has the same taxability as the pre-tax deduction being refunded (e.g. the medical deduction in the example above). To copy MDRC, use the wage type copier found in the following section of the U.S. Payroll IMG: Basic Settings Environment for Maintaining Wage Types Create wage type catalog Once you have done so, you will need to make sure that the copied wage type has the following processing class values. Processing class 68: 1 Processing class 69: 2 Processing class 71: A (where A is the processing class 71 value of the refunded pre-tax deduction). Source code corrections _______________________________________________________________________ Valid releases Note is release independent

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