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Transmitting Tax Impounds

Tax impounds are transmitted to your financial institution once daily for all clients. ProPay automatically creates tax impound entries during check printing for all taxes due, including 941, 940, state withholding (STWT), state unemployment insurance (SUI), and local taxes.

Note: Some states or local agencies don't accept electronic tax payments for state withholding or SUI taxes. In these cases, ProPay still impounds the taxes from the employer's account but prints a check to the agency instead of creating an electronic payment.

Access the Tax Impounds Screen

  1. Click Client Functions > Electronic Processing > Tax Impounds.
  2. Review the list of all tax impound transactions ready for transmission.

Before You Transmit

Review the transaction list

On a normal day, no changes should be needed. Entries are created automatically during check printing.

The file is sorted by Company ID and Company name, making it easy to review all entries for a particular employer.

Delete transactions (if needed)

You have the option to delete any or all tax impound transactions before transmitting.

Recreate entries for a specific client

If you need to recreate entries for a particular client:

  1. Delete all entries for this client in the tax impounds screen.
  2. Delete all tax payments for this client.
  3. Run Print Checks for Selected Employees to force the recreation of tax payments.

Understanding the Transaction Fields

Co-ID and Company

The Company ID and Company name identify which employer the transaction belongs to.

Pay Date

The employer's regular pay date that all these entries pertain to.

Settle date

The settlement date when funds must be in the receiver's bank account. The originating party may need to send this file two, three, or more days in advance through the ACH system.

Type

The type indicates the tax type or entry type:

  • DRAFT - Drafting of employer's bank account
  • PROC_DR - Debit into payroll processor's bank account
  • PROC_CR - Credit into payroll processor's account
  • BILL - Billing fees for payroll processing
  • 941, 940, SUI, STWT, LOC1, LOC - Type of tax being paid

D/C (Debit/Credit)

  • D = Debit
  • C = Credit

Verify totals balance

Check the total debits and credits. The difference should equal zero. If not:

  1. Find out which employer is out of balance.
  2. Delete any extra entries.
  3. Recreate all entries for that employer as explained above.

Export the Tax Impounds File

  1. Click Export to create your tax impounds file.
  2. ProPay creates a NACHA-compatible text file with an 8-digit name and .TAX extension (e.g., 35010424.TAX):
    • First 4 digits: Your unique sender ID number.
    • Last 4 digits: Month and day (MMDD format).

    Upload to Your ACH Processor

    1. Log in to your ACH processor's or financial institution's website.
    2. Go to the file upload area.
    3. Select the .TAX file created by ProPay.
    4. Follow your processor's instructions to complete the upload.

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