State Taxes Overview
Overview
Go to Client Functions > Tax Returns for state tax filing, or Client Functions > Electronic Functions > State Tax Payments for electronic state payments.
ProPay supports state tax payment processing for all 50 states, with specialized electronic payment capabilities for states that offer online filing and payment systems. Each state has unique requirements for withholding tax and unemployment insurance payments.
State Tax Payment Methods
Electronic State Payments
Many states accept electronic tax payments through third-party processors or their own websites. ProPay can export payment files in the format required by these systems.
Common State Payment Processors:
- California - GOVONE (EDD)
- New Jersey - AXWAY
- Massachusetts - State website direct upload
- Other states - Check your client's state website for specific payroll tax payment processing information
Paper Checks
For states that don't accept electronic payments or if clients prefer paper:
- ProPay prints tax checks automatically when processing payroll
- Checks include payment coupons when required by the state
- Due dates appear on check stubs
State Tax Impounds
If you use ACH-CREDIT method with a Payroll Processor:
- ProPay impounds state taxes from employer accounts during payroll processing
- Funds are held in escrow
- Payments are made electronically or by check when due
California EDD Tax Payments
Go to Client Functions > Electronic Functions > State Tax Payments > California to export California EDD payment files.
New Format (Effective July 1, 2016)
California implemented a new format for EDD tax payments as detailed in EDD Publication 154, pages 24-26. ProPay changed from the GOVONE format to "Direct to State" format to comply with these requirements.
Login Page
Access the bulk payment system for California EDD: GOVONE Bulk Payment Login
File Format
ProPay uses the Fixed file format as explained in CA Publication DE 154, Page 22.
California File Specifications:
| Field Name | Position | Length |
|---|---|---|
| Tax Type | 1 | 5 |
| Agency Account # | 6 | 8 |
| Security Code | 14 | 4 |
| Payment Date | 19 | 6 |
| Bank Debit Date | 24 | 6 |
| Amount 1 - SDI, UI | 30 | 11 |
| Amount 2 - WH PIT | 41 | 11 |
Exporting California Payments
- Click Client Functions
- Select Electronic Processing
- Choose State Tax Payments
- Select California
- Choose the clients to include
- Click Export
- ProPay creates a fixed-format file
- Upload the file to the GOVONE website
Payment Types
SDI (State Disability Insurance) Employee-paid disability insurance withheld from wages
UI (Unemployment Insurance) Employer-paid unemployment insurance based on taxable wage base
WH PIT (Withholding Personal Income Tax) State income tax withheld from employee wages
Massachusetts Tax Payments
Go to Client Functions > Electronic Functions > State Tax Payments > Massachusetts to export Massachusetts payment files.
E-Filing Requirements
Massachusetts accepts electronic withholding tax payments through their state system.
Instructions and File Layout
Review the Massachusetts instructions and file layout: Massachusetts MA941X Instructions (PDF)
See Page 3 for the Massachusetts MA941X Withholding Text File Layout.
Exporting Massachusetts Payments
- Click Client Functions
- Select Electronic Processing
- Choose State Tax Payments
- Select Massachusetts
- Choose the clients to include
- Click Export
- ProPay creates a formatted file
- Upload to the Massachusetts Department of Revenue website
State Unemployment Insurance (SUI)
How SUI Works
Each state sets its own:
- Taxable wage base - Amount of wages subject to SUI tax per employee per year (varies by state)
- Tax rate - Percentage applied to taxable wages (varies by employer experience rating)
- Due dates - When payments must be made (typically quarterly)
- Reporting requirements - Forms and filing deadlines
ProPay SUI Calculations
ProPay automatically:
- Tracks each employee's wages against the state wage base
- Applies the correct SUI rate from Employer Setup
- Stops calculating SUI when an employee exceeds the wage base
- Generates SUI payments based on the employer's tax deposit frequency
Setting Up SUI
Go to Employer > Employer Setup > Screen 1 to configure SUI rates and deposit frequencies.
- Click Client Functions
- Select Edit/Change Client
- Click Employer Setup - Page 1
- Enter:
- State SUI Rate - Employer's assigned rate
- SUI Wage Base - State's annual wage base limit
- SUI Deposit Frequency - Quarterly, monthly, or as required by state
- Employee's state W-4 or equivalent form
- State withholding tax tables
- Supplemental wage rules
- Local tax requirements (where applicable)
- During payroll processing, state tax is withheld from employee wages
- When checks are printed, ProPay evaluates tax liability
- If payment is due based on deposit frequency, ProPay creates:
- Paper tax check with payment coupon
- Electronic payment entry for EFTPS-style systems
- Tax impound entry for ACH processors
- Payments are transmitted or printed based on employer setup
- Set up separate state tax configurations in Employer Setup
- Assign employees to their work state in Employee Setup
- ProPay tracks and pays taxes to each state separately
- State-specific forms (e.g., state W-2s) include only wages for that state
- Quarterly wage reports listing all employees
- Tax payment reconciliation
- Electronic filing where available
- Due typically by the end of the month following quarter end
- State W-2 filing - Copy of federal W-2 or state equivalent
- Annual reconciliation - Summary of all quarterly filings
- Unemployment tax annual report - Form varies by state
- From Main Payroll Menu, click Taxes
- The screen displays:
- 941 - Federal withholding and FICA
- STWT - State withholding tax
- 940 - Federal unemployment (FUTA)
- SUI - State unemployment insurance
- LOCAL - Local taxes if applicable
- Accrued - Total liability for the quarter
- Paid - Sum of all payments made
- Balance - Amount still owed
- Process payroll for all clients
- Click Client Functions
- Select Electronic Processing
- Choose State Tax Payments
- Select the state
- Choose the tax period
- Select clients to include
- Click Export
- Save the file to the specified directory
- Upload to the state website or third-party processor
- File format - Fixed width, delimited, or XML
- Field positions - Starting position and length for each field
- Date format - MMDDYYYY, YYYYMMDD, etc.
- Amount format - Decimal places, zero-padding, etc.
- Verify all tax payments are entered correctly
- Check that the correct tax deposit frequency is set
- Review employee state tax withholding calculations
- Ensure state tax rates are current
- Check for manual entries or adjustments
- Verify file format matches state specifications
- Check that all required fields are populated
- Ensure employer state ID is correct
- Validate date formats
- Confirm amounts don't have formatting errors
- Review state's error message for specific issues
- Check the Tax Payments file for duplicate entries
- Delete the duplicate entry
- Do not regenerate if the payment has already been submitted
- Contact the state agency if a duplicate payment was made
- Q1 - April 30
- Q2 - July 31
- Q3 - October 31
- Q4 - January 31
- W-2 filing with state - Typically January 31
- Annual reconciliation - Usually January 31 or when filing W-2s
- SUI annual report - Varies by state, often January 31
- EDD Website
- Publication DE 154 - E-Services for Business
- EDD Forms and Publications
- Department of Revenue
- MA941X Instructions
- Withholding Tax Guide
- Check each state's Department of Revenue or Employment Security website
- State tax tables updated annually
- Employer handbooks and guides
- Electronic filing specifications
- State W-2 filing instructions
- ProPay State Tax Tables setup
- Employer Setup configuration guide
- Electronic tax payment transmittal procedures
State Withholding Tax (STWT)
State Income Tax Withholding
Most states require employers to withhold state income tax from employee wages. ProPay calculates withholding based on:
State Withholding Payment Process
ProPay generates state withholding tax payments:
Multi-State Employers
For employers with employees in multiple states:
Special State Tax Situations
Rhode Island TDI and JDF Taxes
Rhode Island requires Temporary Disability Insurance (TDI) and Job Development Fund (JDF) taxes. ProPay handles these as special state taxes with their own rates and wage bases.
Pennsylvania Local Taxes
Pennsylvania has numerous local earned income taxes (EIT) that vary by municipality. ProPay supports PA local tax calculations and payments through the local tax setup feature.
Oregon Special Taxes
Oregon requires Transit District taxes and other special local taxes in certain areas. Configure these in the special taxes section of Employer Setup.
State Tax Reporting
Quarterly State Returns
Most states require quarterly wage and tax reports, similar to federal Form 941.
Common Requirements:
Annual State Forms
States require annual reconciliation forms:
ProPay helps prepare these forms through its tax forms and electronic filing features.
Viewing State Tax Liability
Tax Liability Screen
From the Main Payroll Menu, click Taxes to view the Tax Liability screen.
State Tax Balance
The screen shows for each tax type:
Export State Payments Process
Go to Client Functions > Electronic Functions > State Tax Payments to export electronic state payment files.
General Export Procedure
File Specifications
When prompted to define file specifications, ProPay may ask for:
Enter specifications exactly as provided in the state's documentation.
Troubleshooting State Tax Payments
Issue: State Tax Balance Doesn't Match
Solution:
Issue: Electronic File Rejected by State
Solution:
Issue: Duplicate Payment
Solution:
State Tax Filing Reminders
Quarterly Deadlines
Most states require quarterly returns by:
Note: Some states have different deadlines. Always verify with the specific state agency.
Year-End Deadlines
Electronic Filing Deadlines
Some states extend electronic filing deadlines. Check state-specific requirements.