The Vertex Project - A Strategic Shift to Cloud Tax Processing

• The Vertex Project - A Strategic Shift to Cloud Tax Processing
  • Why We’re Retiring PTQ and Embracing PTX for Accuracy, Speed, and Compliance
    • Introduction to the Vertex Project
    • Brief History: Where We Are Coming From (PTQ)
    • Why the Shift? What’s Changing
    • Project Goals and Benefits of PTX
    • Secure, Compliant Cloud Processing
      • Token Caching & Rate Limiting
    • PTQ vs PTX: How Tax Processing Works Differently
      • PTQ (Legacy Engine)
      • PTX (Cloud Engine)
    • What CMiC Sends to PTX (REST API Payload)
    • Deduction IDs in CMiC
    • Compensation IDs (New in PTX)
      • How Taxability Works (Example: Group Term Life $20)
    • Benefits of Compensation IDs
    • Where to Look for Taxability Rules
    • Key Functional Differences: PTQ vs PTX

Why We’re Retiring PTQ and Embracing PTX for Accuracy, Speed, and Compliance

Introduction to the Vertex Project

The Vertex Project represents one of the most significant shifts in CMiC Payroll’s history — moving payroll tax processing from the legacy PTQ engine to the cloud-native PTX engine.

PTQ has served for nearly 30 years but is fundamentally outdated:

• C-language legacy engine installed locally on servers.

• Manual monthly updates required, delivered by CMiC.

• Reliance on Quantum Array (static overrides) for tax rules.

• Limited accuracy in multi-jurisdiction and reciprocity scenarios.

• High dependency on manual setup by customers, creating risk of error.

As of August 2026, PTQ will be retired by Vertex. Its successor, PTX, is built for cloud processing, using REST APIs and dynamic taxability rules.

Brief History: Where We Are Coming From (PTQ)

• PTQ was heavily reliant on CMiC’s overrides, particularly the Quantum Array (manual overrides), dictating which taxes to calculate.

• Compliance challenges surfaced regularly — for example, complex reciprocity between states like Maryland vs. D.C. or Wisconsin vs. Minnesota may have produced inaccurate results.

• Errors in setup (e.g., forgetting to assign SUTA or local tax in “Taxes by Location”) meant missing taxes, requiring manual adjustments or data fixes.

The bottom line: PTQ’s limitations were not just technical — they created real-world compliance risks and overhead for customers.

Why the Shift? What’s Changing

• PTQ Retires: Official end of life August 2026.

• PTX Arrives:

  • Java-based engine

  • Cloud-native, no local install

  • REST API driven

  • Automated monthly updates pushed by Vertex

• CMiC integration delivered in Patch 22:

• Customers can process payroll in both PTQ and PTX.

• Enables side-by-side comparison of results for validation.

Project Goals and Benefits of PTX

1. Move to Cloud-Native Tax Processing

   • No local installations.

   • Eliminates manual monthly patching.

2. Improve Speed & Scalability

• Real-time tax evaluation.

• Faster than C-based PTQ.

3. Boost Accuracy & Flexibility

   • Dynamic configuration (no more static overrides).

   • Full REST API payload ensures Vertex gets complete structured data.

   • Handles reciprocity, jurisdictional rules, and new legislation more accurately.

4. Reduce Technical Debt

   • No retroactive fixes due to missed setups. In case forgot to assign benefit to the Tax Elements screen or tax itself in Work Locations screen.

   • Automatic updates tested with 15-day QA window in PTX test environment before promotion to production.

Secure, Compliant Cloud Processing

PTX ensures enterprise-grade security:

• Token-Based Authentication: Every API call requires a valid token.

  

  Token Caching Process

• OAuth 2.0 Client Credential Grant: Same model as CMiC ESS.

• Minimal Data Exposure: No SSNs, banking, or PII sent. Only non-sensitive payroll tax data (employee ID, GeoCodes, wages, deductions)

  

  Sample JSON Request

Token Caching & Rate Limiting

• Cached token endpoint:

  https://tokenguard.vertexcloud.com/cached/oauth/token

  

  System Options - External Web Servers

• Limit: 10 token requests per 8 hours (400 Bad Request if exceeded).

• Efficiency: Reduces authentication overhead while maintaining security.

PTQ vs PTX: How Tax Processing Works Differently

PTQ (Legacy Engine)

• CMiC controlled rules via Quantum Array (manual overrides).

• Required:

  • Taxes by Location setup for all federal, state, local taxes.

  • Tax Elements screen to define benefit taxability.

• Missing setup → wrong taxable earnings.

• Result: Inflexible, error-prone, high maintenance.

PTX (Cloud Engine)

• Vertex dynamically determines all applicable taxes.

• Overrides only used when explicitly entered.

• Taxes auto-determined via Work & Residence GeoCodes.

• Benefit taxability auto-calculated by Vertex rules.

• Reciprocity treatment improved with built-in jurisdiction logic.

• Result: Intelligent, accurate, configuration-driven processing.

What CMiC Sends to PTX (REST API Payload)

Vertex - Payroll Tax Calculation

• Employee Info: Identifier, residency, employment details.

• Work Locations: GeoCodes for each site worked.

• Compensations and Deductions: Wages, benefits, pre/post-tax deductions, with IDs.

• Jurisdictions: Auto-inferred by GeoCodes.

• Overrides (Optional): Specific adjustments (e.g., calculation method).

• Aggregated Sections: Year-to-date, quarter-to-date totals for FICA limits, 401(k) caps, etc.

Deduction IDs in CMiC

• Existing codes (e.g., 01 = 401k, 20 = Cafeteria Plan).

• Vertex applies taxability rules automatically.

• Current PTQ Limitation: Users must repeat setup per tax/jurisdiction.

• Error risk: Missing a setup leads to incorrect tax results.

Compensation IDs (New in PTX)

Compensation IDs

• Unique identifiers for earnings and benefits.

• Already existed in Vertex, but CMiC always defaulted to “00” (cash wages) in PTQ.

• In PTX, Compensation IDs are fully utilized.

Examples:

• 00 = Cash (default wages)

• 09 = Qualified Parking

• 20 = Group Term Life Insurance

• 25 = Bonus

• Stock Options, Housing, Adoption Assistance, Commissions

How Taxability Works (Example: Group Term Life $20)

• Social Security/Medicare: $1,000 (cash) + $20 (GTL) = $1,020 taxable.

• Federal Withholding: GTL exempt, but reportable → taxable = $1,000, subject gross = $1,020.

• FUTA: GTL fully exempt → taxable = $1,000.

Result: Vertex applies correct rules automatically — no manual setup in Tax Elements.

Benefits of Compensation IDs

• Streamlined Setup: One configuration applies across all jurisdictions.

• Reduced Errors: Eliminates missed setups.

• Industry Alignment: Same model as Deduction IDs.

• Supports Complex Types: Bonuses, GTL, parking, stock options, housing.

• Accurate & Intelligent: No manual overrides required.

Where to Look for Taxability Rules

• Always refer to the official Vertex Tax Guide.

• Provides jurisdiction-specific taxability rules for each compensation type.

• Rules clarify whether an item is:

  • Taxable (subject + adjusted gross)

  • Subject Only (reportable, not taxable)

  • Exempt

Example: GTL > $50,000

• Pennsylvania State Withholding: Exempt

• Philadelphia Local Tax: Taxable

Key Functional Differences: PTQ vs PTX

Area	PTQ (Old)	PTX (New)
Tax Elements	Required	Eliminated
Benefit Taxability	Manual	Auto via Compensation IDs
Deduction Handling	Partially mapped	Fully integrated
Security	Local engine	OAuth 2.0 tokens
Cloud Support	No	Yes