To create a tax jurisdiction code:Create tax jurisdiction codes to identify tax rates for a jurisdiction and the G/L account (tax authority) to post the tax to. A tax jurisdiction code is not necessarily equal to one tax authority. For example, many states charge sales tax and allow counties and cities to add local sales taxes. One jurisdiction code may include the G/L accounts for more than one tax authority. The G/L account for one tax authority may be updated by more than one jurisdiction.
Tax jurisdiction codes are assigned to zip codes. During order entry, tax is applied according to the zip code.
In addition to its regular rate, each tax code can have a reduced tax rate. The reduced rate is triggered by tax exception groups. You can also use a tax jurisdiction code to:
Enter an override tax for freight and handling.
Define a maximum taxable dollar amount for an order or line item.
Identify tax exceptions for product groups.
Note: If you use the Eclipse National Sales Tax Database companion product, creating and maintaining tax jurisdiction codes is not required. Geocodes replace tax jurisdiction codes.
To create a tax jurisdiction code:
From the Files > Tax, Duty & Exchange Rates menu, select Tax Jurisdiction Code Maintenance to display the Tax Jurisdiction Code Maintenance screen.
In the Code field, enter a unique and descriptive tax code, up to 10 characters.
Do not use SHIPTO, BRANCH, BRANCH.PRC, BRSHIPTO, and PBRSHIPTO as tax codes. These are reserved words used in Eclipse.
The Tax Code IDs menu displays, listing currently defined effective dates and the option NEW.
Select the option NEW.
In the Effective Date field, enter the date when the new tax code becomes effective.
In the Desc field, define the tax code or explain what political entity or entities the tax jurisdiction includes.
In the Juris. G/L Account column, identify the G/L accounts (tax authorities) to which this tax jurisdiction must pay taxes. Press F10 to display a list of G/L accounts.
In the Rate column, enter the normal tax rate for each G/L account. For example, enter a tax rate of 6.5 percent as 6.5.
To allow a jurisdiction type to be assigned to each G/L account, in the Type column, enter one of the following:
State
City
County
Local
In the Use Tax Rate from Original Sales Order on Return Orders (Y/N/BLANK) field, enter one of the following to determine which sales tax rate to use on return orders:
Y – Uses the tax rate from the original sales order.
N – Uses the tax rate on the day the item is returned. This is the default.
If you leave this field blank, the system uses the settings in the Use Tax Rate From Original Sales Order For Returns control maintenance record.
Note: When you want to use the tax rate from the original sales order, and you are entering a return order, you must enter the original sales order number. Otherwise, the system uses the current tax rate. In addition, you cannot include positive quantity items on the return sales order.
Some tax authorities identify types of products or customers that are eligible for a reduced tax rate. Each G/L account, or tax authority, can have a reduced tax rate in addition to its regular rate. This is not required, but the option is available.
To associate a reduced tax rate with a tax jurisdiction code:
From the Files > Tax, Duty & Exchange Rates menu, select Tax Jurisdiction Code Maintenance to display the Tax Jurisdiction Code Maintenance screen.
Display a tax jurisdiction code.
If a tax authority offers a reduced rate, enter the rate in the Reduced field.
The reduced rate is used when triggered by a tax exception group.
Freight and handling charges are considered to be tax exempt by the system, unless their associated G/L account is listed on this screen.
To make freight and handling charges in a jurisdiction taxable:
From the Files > Tax, Duty & Exchange Rates menu, select Tax Jurisdiction Code Maintenance to display the Tax Jurisdiction Code Maintenance screen.
Display a tax jurisdiction code.
Use the Tax Misc G/L ID hot key to display the Tax Misc G/L ID screen, where you can enter the associated G/L account name. Press Esc to return to the Tax Jurisdiction Code Maintenance screen.
In the Frt & Hndl field, enter the tax rate.
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If there is... |
Then... |
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a Total Freight amount entered on the Sales Order Entry Totals screen and a G/L account for freight is included on the Tax Misc G/L ID screen |
the Total Freight amount will by multiplied by this rate to obtain the tax amount that will be posted for the freight. |
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no tax rate entered in the Frt & Hndl field when one is needed |
the system will use the regular tax rate specified in the Rate field. |
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no Total Freight amount entered on the Sales Order Entry Totals screen, or there is no G/L account for freight included on the Tax Misc G/L ID screen |
no tax will be applied to the Total Freight amount. |
The maximum taxable dollar amount is an option Eclipse provides. Some local tax authorities set a maximum dollar amount on which tax can be charged. For example, if the price of an item on a sales order is $2500 and the Maximum Taxable amount is $1200, the full rate sales tax is only charged on $1200. If more than one authority within the jurisdiction has the same allowance then that amount should be repeated for each authority.
To enter a maximum taxable amount for a tax jurisdiction:
From the Files > Tax, Duty & Exchange Rates menu, select Tax Jurisdiction Code Maintenance to display the Tax Jurisdiction Code Maintenance screen.
Display a tax jurisdiction code.
Max Txbl column displays either a blank or * Splt* to indicate that a value has been set on the Split Tax Rate Maintenance screen. Use the Split Rates hot key to enter a dollar amount into this field. For more information, see Splitting Sales Tax Rates.
In the Per column, indicate whether the Maximum Taxable value is based on a single line item, extended line item, or the entire order. Press F10 and select Item, Ext, or Order.
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If you select... |
Then Eclipse checks... |
Example: Max Taxable = $1600 |
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Item |
the dollar amount of each single item on the order. When the dollar amount on any item exceeds the Maximum Taxable value, the full rate sales tax is only charged on the maximum taxable amount. |
3 widgets @ $2000 each = $6000 full tax on $4800 (3 x $1600) reduced or no tax on $1200 (3 x $400) |
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Ext (extended) |
the extended dollar amount of each line item on the order. When the extended dollar amount on any line item exceeds the Maximum Taxable value, the full rate sales tax is only charged on the maximum taxable amount. |
3 widgets @ $2000 each = $6000 full tax on $1600 reduced or no tax on $4400 |
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Order |
the total dollar amount of the entire order. When the dollar amount of the entire order exceeds the Maximum Taxable value, the full rate sales tax is only charged on the maximum taxable amount. |
3 widgets @ $2000 each = $6000 full tax on $1600 reduced or no tax on $9400 |
If a product tax exception group spans all the customers in a jurisdiction, apply the tax exception to the tax jurisdiction rather than individual customers.
To apply a tax exception group to this tax jurisdiction:
From the Files > Tax, Duty & Exchange Rates menu, select Tax Jurisdiction Code Maintenance to display the Tax Jurisdiction Code Maintenance screen.
Display a tax jurisdiction code.
Use the Prod Tax Exception Groups hot key to display the Exception Groups screen.
For each group the jurisdiction participates in, press F10 and select the group.
Press Esc to save the data.
If your company is Canadian, you can also flag a tax account associated with the tax code as a Goods and Services Tax (GST) or Provincial Sales Tax (PST) account. These settings are used for reporting purposes.
To flag a tax account as a GST or PST account:
From the Files > Tax, Duty & Exchange Rates menu, select Tax Jurisdiction Code Maintenance to display the Tax Jurisdiction Code Maintenance screen.
Display a tax jurisdiction code.
Position the cursor on a G/L account.
Use the GST/PST hot key to display the GST/PST Maintenance screen.
Note: This hot key is only used by Canadian distributors who have line item taxability enabled. This hot key must be enabled by setting the Enable GST/PST Hot Key In Tax Jurisdiction Code Maintenance control maintenance record to Y.
Set the appropriate flag. Keep in mind that you cannot enter a Y in both the GST and PST columns.
See Also: