A number of cities reciprocate with other cities regarding employee payroll withholding taxes. At this time, TEAM has limited the setup of Cities with reciprocity to the following cities and their suburbs:
- Cincinnati
- Cleveland
- Columbus
- Toledo
- Detroit
- Flint
- Lansing
If there are additional cities where this is needed, contact TEAM Client Services by phone at 800-500-4499 or by email at supportstaff@teamsoftware.com in order for the proper research to be done. If an Employee lives in one of these cities and they work in an outlying suburb that has reciprocity with the city, an Employer has authority to reduce witholding to the extent of the tax liability in the suburb.
Residents of City A (Cincinnati) are taxed 2.1% of their earnings, UNLESS they work in City B (Montgomery), where reciprocity is in force. In this case, the employee will be taxed applicable City B withholding, by which amount City A tax will be reduced.
City A (Cincinnati) = 2.1%
City B (Montgomery) = 1%
In this case Cincinnati's resident rate for this employee would be reduced to 1.1% for the portion of the earnings worked in Montgomery.
The system determines what suburbs have reciprocity with a particular city, if there is a common link in the Formula Reference Code of the Tax Table area.
To establish a link between a city and all of the suburbs with which it shares reciprocity:
- From the Payroll menu, Taxes screen, select the Government Type of either City or County/School Districts
- Enter the city name in all caps (CINCINNATI) in the References area Formula Reference Code field. This identifies the main city.
- For each of the cities that have reciprocity with the main city, enter the name of the main city, followed by a unique number in the Formula Reference Code area (CINCINNATI1).
For example, if you have four suburbs that have reciprocity with Cincinnati, they would all have to have unique Formula Reference Codes (CINCINNATI1, CINCINNATI2, CINCINNATI3, CINCINNATI4). Anyone who lives in Cincinnati will have Cincinnati set up in the Employee Master File, Tax Info screen.
Any Job that is located within a particular suburb of Cincinnati, will have the appropriate suburb indicated in the city tax code of the Job File.
Any Job that is within Cincinnati will have the Cincinnati city tax code set up in the Job File.
Since the suburbs are linked to Cincinnati in this fashion, the Cincinnati withholding can then be adjusted to insure that the employee is not paying more than 2.1% on wages earned within this reciprocity area.
Below are examples of a few outlying suburbs of Cincinnati and how each formula reference code would be set up. As long as the numbers at the end of the formula reference code are kept unique for each suburb that has reciprocity, the tax withholding will be handled appropriately as described here.
| City Name | Formula Reference Code |
|---|---|
| Cincinnati | CINCINNATI |
| Blue Ash, OH | CINCINNATI1 |
| Centerville, OH | CINCINNATI2 |
| Evandale, OH | CINCINNATI3 |
You can link suburbs to Cleveland, Columbus, Toledo, Detroit, Flint or Lansing in a similar fashion. Instead of entering CINCINNATI in the Formula Reference Code area, you would substitute with CLEVELAND, COLUMBUS, TOLEDO, Detroit, Flint or Lansing. If your company finds the need to have additional reciprocities, contact TEAM.