Massachusetts - Supplemental vs Base Wages

[alicia_robinson]

Hello -

We have come across an issue with Massachusetts income tax withholding calculations where regular wages and supplemental wages are being paid at the same time.  We posted a ticket with SAP who told us we needed to remove our supplemental wage type from the "Base wages for BSI" cumulation.  This is a concern for us since all of our taxable wage types (regular or supplemental) are configured with this cumulation and have been since the implementation of SAP.

Does anyone else have a similar issue or similar configuration?  Your insight would be most helpful and appreciated.

Thanks,

Alicia

[Euna]

Hi Alicia,

Are you using BSI SaaS? We're on transition to SaaS version and noticed that supplemental tax amount is not the same as on OP during the testing. We'd just created a ticket to BSI, but your issue seems the same as ours.

Regards,

Euna

[alicia_robinson]

Hi Euna -

We are still OP - not SaaS.

Our issue is that for MA, the supplemental wages are being added to base wages and causing the taxes to be overstated. We are being told to remove the cumulation 14 (base wages for BSI) from our supplemental wage type.  The issue we have with this is that impacts all tax authorities and not just MA and we have been under the impression that all taxable wage types should have this cumulation marked.

[alicia_robinson]

I will also add that BSI informed us they had other customers that had reached out to them with this same issue and BSI had to pull SAP in for help. We are just trying to find those "other" customers and find out how you resolved this issue.

[alicia_robinson]

Hi Euna - just wanted to see if you had received an answer from BSI on your issue.

[Euna]

Hi Alicia,

<Edited> 

The wage type was set '2' for Processing class 68 and sending '9' for SM to both OP and SaaS environment, but the result amount is different. 

BSI thinks we're using "Separate Aggregation Method" in SaaS, but "Flat Rate Method" in OP environment. I'm not sure why the output is different in both environments, but but at least I think I know how to get the same amount in SaaS environment. 

Euna 

[alicia_robinson]

Euna - Thanks for the response! I somehow missed the notification from weeks back. For us we do have wage types that need to be marked as "2" for PC68 because we want them to calculate as supplemental for taxes (ex: bonuses). What BSI and SAP both told us is that we needed to remove those supplemental wage types from the cumulation class 14 (Base wage for BSI) because this is meant just for what would be considered "base wages". The issue came up with MA for an employee who got a PTO payout which we tax as supplemental. When it tried to calculate MA tax which annualizes, it pulled that PTO payout into the annualized total with the employee's regular wages because we had it marked for cumulation 14.

[alicia_robinson]

Hello all - Is anyone having an issue with Massachusetts and negative supplemental payments being paid at the same time as regular payments beginning in your 2025 payrolls and this reverse engine process? We have a few employees that we cannot pay correctly because MA supplemental is calculating some astronomical tax amount on a negative supplemental payment passing with a positive supplemental ($205,000 tax on $44.49 wages). The /S01 is negative in our first payroll of 2025 due to a refund of a supplemental payment made in 2024 that is now being reversed in 2025 (happens on a regular basis-nothing new for us). We had a lot of issues with MA and supplemental payments when they changed their tax calculation last July, but finally got that resolved (or so we think). The issue here is that since the /S01 is a negative YTD for period 1.2025, the BSI interface is not creating the "AT ETC: 3" output for the reverse engine process that it should. It is still creating it as "AT ETC: 0" and this is creating the astronomical tax amount that will never be taken because it is so high. It also prevents any pre-tax deductions from being withheld from the employee since taxes are to be withheld first and then other items come second. This is not an issue for any other state with the same exact setup (GA, VA, NC, DC, etc). These other states are creating the "AT ETC: 3" in the BSI interface even though they also have a negative YTD /S01 to process. So why is MA different than these other states? We have a ticket raised with both BSI and SAP and have applied all notes that have been mentioned, but we are still unable to get this to work properly. I would very much appreciate anyone's input if you have seen this issue in your system. Thanks, Alicia