Location codes represent the various overlapping jurisdictional boundaries that contain a particular address. They have several purposes, but primarily they allow the Symmetry Tax Engine (STE) to determine what taxes apply and which wages should be taxed.
If you're a currently licensed STE client, read Introduction to Location Codes in our Client Support Center for additional details. For now, these are the important takeaways you'll need to get started:
- The engine will convert addresses to location codes for you, but you must do this before calculating payroll taxes
- A "placeholder" location code of 00-000-0000 is used for all U.S. federal taxes
Every tax supported by the STE has its own unique tax ID. Whenever the engine reports applicable taxes or calculates payroll withholding amounts, it will always be connected to a particular tax's unique ID.
For example, the ID for the federal income tax (FIT) is 00-000-0000-FIT-000. You'll tell the engine you want to calculate FIT by including that tax ID, and then the engine will also return the FIT withholding amount under that tax ID.
Currently licensed STE clients can read our article on Symmetry Unique Tax IDs for additional details. But for now, the important thing to know is that these IDs are how you tell the engine which payroll taxes you want calculated!
At the highest level, the general flow for using the STE has three parts:
Before the STE can do anything with an employee's home and work addresses, they need to be converted into usable location codes using our Location Code Service (LCS).
Location codes change infrequently, so we recommend storing the codes locally within your system and only refreshing them at regular intervals (or any time that the employee changes addresses).
For more information on LCS calls and for best practices, please see Introduction to Location Codes and the Location Code Service in Symmetry's Client Support Center (requires login).
Once you have found the location codes corresponding to an employee's home and work addresses, you can query the STE to find a list of potentially applicable taxes.
The engine will also let you know if there is any additional special information about the employee or employer that is needed to compute the tax. For example, the employee's federal income tax can't be calculated without first knowing the filing status they selected on their Form W-4!
The taxes returned by the STE should always be considered "potentially applicable" because there may be special circumstances (outside of what is tracked by the STE) that could cause the employee or employer to be exempt from the tax.
Because of this, the STE gives you the option during setup to exempt any tax as needed. You also always have the option to not set a tax up before calculation.
Now that you have all of the relevant location codes, tax IDs, and a list of additional required information, you can finally set up and compute the taxes for the employee and employer for this paycheck.
When setting up a payroll calculation in the STE, you'll also indicate any benefit contributions, imputed income, or other items that may affect withholding amounts.
After running the calculation, you'll retrieve the tax amounts withheld for each tax. You can then use these amounts within your system to determine the employee's ultimate net pay!
Updated 3 months ago