System Setup for Tax Impounds
Before processing tax impounds, configure your ACH processor settings and file format preferences. This one-time setup ensures ProPay creates correctly formatted NACHA files for tax payments to government agencies.
Access Tax Impounds Setup
- Click Client Functions > Set-Up > Tax Impounds.
Note: If your ACH processor has specific file layout requirements and you need assistance, email their specifications to Paysoft support for configuration guidance.
Configure ACH Processor Information
ACH bank or processor
Enter the name of the bank, financial institution, or ACH processor that processes the ACH file containing tax impounds and tax payments.
ACH processor phone number and contact
Enter the phone number and contact person name for voice communications with your processor.
Processor modem phone number
Enter the bank's modem phone number (if applicable). This number is automatically called when you submit an ACH file to this bank or third-party processor.
Note: Most modern ACH processors use web-based file uploads rather than modem connections.
Settlement account routing number
Enter the 9-digit bank routing number. Find this number:
- On the bottom of any check from your bank.
- By asking your bank contact person.
Settlement account bank number
Enter the processor's bank account number used to settle all ACH transactions.
Credit description
Enter a description (maximum 11 characters) that appears on bank statements explaining the credit entry to the receiver's bank account.
Example: "TAX IMPOUND" or "TAX PAYMENT"
Configure ACH File Format Settings
Originator ID
Enter the identifier required by your ACH processor for the "1" record of the ACH file.
Common requirements:
- Your federal ID number.
- Your financial institution's 9-digit routing number.
If left blank and you draft the employer's account, ProPay uses the payroll processor's federal ID number as the Originator ID.
Regional ACH processor name (optional)
Enter the name of your regional ACH processor if required. This appears in the "1" record of the ACH file. If unsure, leave blank (defaults to the bank's name).
Regional ACH processor routing number (optional)
Enter the routing number for your regional ACH processor if required. This is used in the type "1" record (File Header Record, Immediate Destination, position 4-13, length 10).
If left blank, ProPay uses the Originator ID. If filled in, this replaces the Originator ID in that field.
ACH processor routing number
Enter the routing number used in the "5" record of the ACH file. If left blank, ProPay uses the payroll processor's bank routing number. Otherwise, enter the 9-digit bank routing number or any other number provided by your ACH processor.
If unsure, leave this field blank.
Configure Processing Options
Default advance draft days
Very important: This determines how many days before the pay date you draft your client's bank account.
Plan to transmit tax impounds with enough advance notice for funds to reach the government agency by the settlement date.
SPAN days
Enter the number of days to use as a filter for viewing transactions from today's date.
Example: Enter 7 to filter transactions with settlement dates within the next 7 days.
Warehousing use: If your ACH processor doesn't have warehousing capability, use SPAN Days to warehouse ACH transactions on your computer and release them as many days in advance as needed.
Draft the employer's funds into your account
Check this box if you want funds to flow from the employer's account into your payroll processor account, then to the appropriate government agency.
ProPay gives you two ways to prepare your tax impounds file:
Option 1: Checked (third-party processing)
- Funds flow from employer's account to your account as a third party.
- Another entry is created originating a funds transfer to the appropriate government agency.
- ProPay uses the payroll processor's federal ID number in the "5" record.
- Most banks require this method and require you to open a settlement account with the bank.
- This protects the bank in case of NSF from the employer's account (your settlement account will be charged).
Option 2: Unchecked (direct processing)
- Funds flow directly from employer's account to the appropriate government agency.
- ProPay uses the employer's federal ID number in the "5" record.
Verify with your ACH processor which method is acceptable before creating and submitting ACH files.
Create single company batches within an ACH file
Check this box to create separate batches for each company within your ACH file.
Benefits:
- Identifies the source of each transaction.
- When you transfer funds from employer accounts to your account, then later to government agencies, the receiver sees the employer's name as the transmitter rather than the payroll processor's name.
Allow unbalanced ACH transactions
Check this box to create unbalanced (single-entry) ACH transactions instead of balanced transactions.
Before enabling: Verify with your bank or third-party ACH processor which format they accept.
For more information, see Unbalanced ACH transactions.