Modules»Accounts Receivable»Tax Zone Exceptions
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Last modified on 2/18/2016 1:04 PM by User.

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Tax Zone Exceptions

In some states a customer does not pay the normal state sales tax, however because they are, for example, a Utility companies (i.e. electric, gas) they are required to pay ½ the normal tax rate.

 

Problem:

A utility is required to pay 3% sales tax, versus the normal state sales tax of 6%.

 

Solution:

  • Denote the customer as Non-Taxable/Exempt ( AR module, Customer Master File - Task 17, St. Tax Flag - field 20). 
  • Setup a Tax Zone code for 3% (AR module, Tax Zone-Task 23):

 

                        Selling                                                  Tax      Tax

Tax Zone          Division            Desc.   Report Title      Rate     Basis    Frt/hnd

33333(i.e.)       01                    GOV    Utility Tax         3          T          N

 

  • Field 8 (Tax Basis) is an important field IF:
    • ‚Äč only items that are marked as Taxable - usually supply items (Inventory module, Item Master - Task 17, Taxable - field 20) are charged the 3% tax, put a "T" in field 7.
    • only items that are marked as Non-taxable/exempt - usually labor items  are charged the 3% tax, put a "N" in field 7
    • the entire sales order and all items (taxable and non-taxable) are to be taxed, the put a "B" in field 7.