New Jersey Should Be Taxable For Section 125 And It Should Not Be Exempt. (Doc ID 2073433.1)

Last updated on MARCH 08, 2017

Applies to:

Oracle HRMS (US) - Version 12.1.3 and later
Information in this document applies to any platform.

Symptoms

On : 12.1.3 version, US Payroll Tax Issues

ACTUAL BEHAVIOR
---------------
The state of New Jersey does not recognize Section 125 deductions as exempt from state tax. Currently Oracle is treating these deductions as pre-tax even though the setup in Oracle states to treat it as taxable.


EXPECTED BEHAVIOR
-----------------------
For the state of New Jersey, 401K should be considered as a pretax item and Health Care 125 should be taxable for state tax

STEPS
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The issue can be reproduced at will with the following steps:
1. Pay the employee regular earnings
2. The employee has a 401k deduction and Healthcare 125 deductions
3. See the system is set up for Health Care 125 deductions to be taxable for New jersey state tax
4. See the system is set up for 401K to be pretax

BUSINESS IMPACT
-----------------------
The issue has the following business impact:
Due to this issue, users cannot see the SIT tax for New Jersey taxing correctly because the Health Care 125 deductions are showing as a pretax item

Cause

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