Question: There are multiple sales tax jurisdictions in one state. How should I set these up?
Answer: Use the example below to help you. However, note that setting up sales tax jurisdiction is only required for internal tax functionality, not for AvaTax interface. For more information, see AvaTax interface FAQ.
Example Customer ABC’s primary ship-to address is located in Uwchlan Township, Chester County, in Pennsylvania state and Customer ABC is not tax-exempt. To set this up, perform the following steps:
For each sales tax rate, select a sales tax jurisdiction (the jurisdiction the tax rate definition is for) and a filing jurisdiction (the jurisdiction under which taxes will be filed). Select sales tax categories for each tax rate. Select an effective date and a general ledger account for sales tax.
The sales tax jurisdiction rate for Uwchlan Township is 1%. It has a parent of Chester County that has a rate of 2% for the county and the Chester County jurisdiction has a parent of Pennsylvania where the rate is 6% for state. The system would match the sales tax category of the product being bought by customer ABC with Uwchlan Township jurisdiction. It the match is found, the system would assign the tax as follows: Tax = 1% + 2% + 6% = 9% tax on the product. |
Question: How can I determine the sales tax calculated for a sales order line item?
Answer: To determine sales tax calculated for a sales order line item, perform the following:
In Order Entry or Order Edit, display the sales order, and note the sales tax jurisdiction entered in the Tax Jurisdiction field on the Ship To tab.
In Sales Tax Jurisdiction Maintenance, enter the tax jurisdiction from step 1, and note the parent jurisdiction entered in the Parent Jurisdiction field (if there is one). If there is a parent jurisdiction, enter it, and determine if it also has a parent jurisdiction.
In Sales Tax Rate Maintenance, review the tax rates for the tax jurisdiction from step 1 and all related parent tax jurisdictions. The total sales tax percentage is the sum of the percentages for each of these tax jurisdictions.