Setup Considerations: Tax Reconciliation
You can use this topic to help make decisions when planning your configuration and use of tax reconciliation. It explains:
- Why to set it up.
- How it fits into the rest of Workday.
- Downstream impacts and cross-product interactions.
- Security requirements and business process configurations.
- Questions and limitations to consider before implementation.
Refer to detailed task instructions for full configuration details.
What It Is
You can use Workday to reconcile tax details from these taxable transactions to tax ledger accounts:
- Accounting center summary journals.
- Accounting journals.
- Operational transactions.
Business Benefits
- Eliminate the need to download multiple reports to reconcile tax outside of Workday, streamlining your workflows.
- Increase visibility into tax activity balances at period close.
- Increase confidence that you’ve recorded and declared all taxable transactions.
Use Cases
You can reconcile transaction tax:
- At period close, to help ensure that you properly record all taxable transactions.
- After creating draft tax declarations, to help ensure that you properly declare all taxable transactions.
Questions to Consider
Questions | Considerations |
|---|---|
When do you want to start using Workday for tax reconciliation? | You can enable transaction tax reconciliation for a company starting from an initial period that's after September 2025. Before enabling tax reconciliation, you must have at least 1 fiscal period with taxable transactions.
After you enable tax reconciliation, Workday automatically generates tax reconciliation activities when you record taxable transactions, which:
Workday doesn't retroactively generate tax reconciliation activities for taxable transactions that you create before September 2025. |
Recommendations
No impact.
Requirements
To reconcile taxable transactions to tax ledger accounts for a company, you must generate:
- One-time tax reconciliation initial balances as a starting point for your reconciliation.
- Beginning balances for each subsequent open period, either manually or by closing leger periods.
If you don't generate tax reconciliation initial balances:
- Transaction tax reconciliation reports don't display data.
- Workday doesn't generate tax reconciliation activities onward.
If you don't generate period beginning balances, transaction tax reconciliation reports only display tax activity.
Limitations
The tax reconciliation reports exclude information about:
- Withholding tax activity.
- Alternate ledger journal lines.
- Unposted journals.
Tenant Setup
No impact.
Security
Domains | Considerations |
|---|---|
Process: Period End in the Financial Accounting functional area. | Enables you to manually generate period beginning balances after you enable tax reconciliation. |
Process: Tax Reconciliation Activity Initial Balance in the Financial Accounting functional area | Enables you to set up tax reconciliation and maintain tax reconciliation initial balances. |
Report Execution in the Tenant Non-Configurable functional area | Enables you to run tax reconciliation reports. |
Reports: Transaction Tax in these functional areas: Common Financial Management, Customer Accounts | Enables you to run reports on tax reconciliation activities. |
Business Processes
No impact.
Reporting
Workday delivers:
- Standard tax reconciliation reports that you can use to help ensure that you properly report and declare all taxable transactions. See Reference: Tax Reconciliation Reports.
- Reporting capabilities to match amounts that you post to tax ledgers with the tax details of the corresponding taxable transactions. See Concept: Tax Reconciliation Activities.
Integrations
No impact.
Connections and Touchpoints
Features | Considerations |
|---|---|
Journals
Ledger Accounts | Workday populates tax reconciliation reports using relevant data from tax journal lines for tax ledger accounts. |
Period and Year Close | After you enable tax reconciliation, Workday generates period beginning balances for the next period when you close fiscal periods subsequent to the initial period. |
Workday offers a Touchpoints Kit with resources to help you understand configuration relationships in your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.