Session 3: Vertex-Driven Tax Automation: What’s New and What’s Gone

• Session 3: Vertex-Driven Tax Automation: What’s New and What’s Gone
  • Overview
  • Why Change Was Needed
  • How Vertex Now Calculates U.S. Payroll Taxes
  • What’s Gone: The Taxes by Location Screen
  • Where The Fields Moved
  • The New Tax Accounting Screen
  • The Tax Calculation Method Screen
  • What Remains the Same
  • Key Takeaways

This session is also available as a PowerPoint presentation: Vertex-Driven Tax Automation: What’s New and What’s Gone.

Overview

On September 4, 2025, CMiC hosted the third session of our Vertex training series. This session focused on one of the most significant transformations in payroll tax processing: the retirement of the legacy Taxes by Location screen and the introduction of Vertex-driven automation for U.S. payroll taxes.

Why Change Was Needed

In the legacy model, payroll teams had to manually configure federal, state, and local tax codes in the Taxes by Location screen. This meant:

• Setting up federal taxes for “ALL States” and “ALL Locations.”

• Repeating state-specific tax setups for every jurisdiction (sometimes 20+ states per employer).

• Entering local and county taxes for each work location, or using “*” as a workaround.

This approach was error-prone, time-consuming, and dependent on user knowledge of every jurisdiction. Missing a single setup often meant missing tax calculations. Reciprocity handling was especially fragile, as overrides told Vertex what to calculate instead of allowing Vertex to determine jurisdictional rules.

How Vertex Now Calculates U.S. Payroll Taxes

With the modernized approach in Patch 22+, Vertex handles all tax determination automatically. Employers no longer tell the system which taxes to calculate—Vertex decides based on:

• Employee Residence

  • Stored in the CMiC Employee Profile.

  • Includes address, Vertex Geocode (state, county, city, school district), PSD jurisdiction.

• Work Location(s)

  • Permanent work location stored in the profile.

  • Or dynamically pulled from the job assignment for field employees.

  • Supports multiple work locations per pay period (e.g., job transfers, travel).

• Payroll Data

  • Wages, benefits, deductions, exemptions, supplemental pay, and compensation items.

With this information, Vertex applies its jurisdictional rules to calculate:

• Federal (FICA, FUTA, Medicare)

• State (withholding, unemployment, disability)

• Local and county taxes (school district, occupational, city)

• Reciprocity rules between states and localities

No more manual setup. No more risk of missing a jurisdiction.

What’s Gone: The Taxes by Location Screen

The Taxes by Location screen is fully deprecated. Employers no longer need to maintain a manual tax catalog. Instead, the system sends residence and work data to Vertex, and Vertex returns all applicable taxes automatically.

Where The Fields Moved

Several fields from the old Taxes by Location screen have been relocated to more logical homes:

• Vendor & Comments: Now in Tax Accounting (financially oriented fields).

• Tax Type: Moved to Benefit & Deduction Master (where taxability belongs).

• Calculation Method & Alternate Codes: Now in the Tax Calculation Method screen.

• Reciprocity (JURINT): Also handled in the Tax Calculation Method screen.

This modular structure makes it easier to manage, audit, and override when necessary.

The New Tax Accounting Screen

The Payroll Tax Accounting screen has been redesigned to remove dependency on tax setup. Key improvements include:

• State & Location inline (no more header-level repetition)

• Ability to set up accounts for ALL States + ALL Locations at once

• Flexible combinations:

  • State = ALL, Location = ALL → Federal taxes

  • State = NY, Location = ALL → New York state taxes

  • State = NY, Location = * → All local/county taxes in NY

• Specific overrides still possible for unique accounts or vendors

This ensures payroll posting never fails due to missing manual tax setup, while still giving customers flexibility to define exceptions.

The Tax Calculation Method Screen

Expanded to handle all tax overrides in one place:

• Pay Run: Regular vs Supplemental.

• Tax Code: Must be specified (no “ALL”).

• Tax Type: Both / Residence / Work.

• Calculation Method: Dynamic values pulled directly from Vertex.

• Alt Codes: For special state cases like NJ.

• Reciprocity (JURINT): Override default reciprocity when needed.

This screen now centralizes all override logic, making configuration cleaner and more transparent.

What Remains the Same

Not everything has changed. Two key components remain:

• Tax Rates Screen: Employers must still enter their own employer tax rates (e.g., FUTA, SUI, SDI, WC).

• Employee Profile Overrides: Individual-level exemptions and overrides remain available for unique employee situations.

Key Takeaways

• Gone: Taxes by Location screen and manual jurisdiction setup.

• New: Simplified Tax Accounting and powerful Tax Calculation Method screen.

• Still Here: Employer rate entry and employee-level overrides.

Final Message:

With Vertex automation, payroll teams can focus on data accuracy—residence, work location, and payroll inputs—while Vertex handles the tax logic. The result is fewer errors, less maintenance, and smarter compliance.