A Tax Zone represents a tax authority or a tax other than the state sales tax. Tax Zone rates are independent of the state tax rate that applies to a customer. A customer can be non-taxable by the state, however a tax zone rate may be applicable. The system allows up to three Tax Zones per sales order, in addition to the state tax. If you choose, you can also have the State Tax setup as one of the Tax Zones (thereby leaving 2 additional Tax Zones for use). Helpful in there is only one report needed for state sales tax returns, versus two reports if using both the standard State Sales Tax and Tax Zones.
Accounts Receivable (Module 2)
Tax Zone (Task 23)
- 01. Zone #:______(5) Numeric, up to 5 digits. DO NOT use 00000, 11111, or 99999 - see below for the usage of these 3 sets of numbers.
- 02. Division #:__(2) Numeric, enter the division number of the selling location.
- 03. Description:________(10) Alpha-numeric, a short description of the tax - used for "searches"
- 04. Report Title:_______________(25) Alpha-numeric, title used on tax reports.
- 05. Report Code:______________(5) * - see note below. Alpha-numeric, defaults to information in “Zone #” (field 01) but can be changed
- 06. G/L Acct #:_____(5) Numeric, sales tax payable account.
- 07. Tax Rate:____(7) Numeric (plus decimal point), the tax percent used to calculate. Enter with decimal point.
- 08. Tax Basis:_(1) T, N or B. Should the tax be applied to sales that are: T(taxable); N(non-taxable); B(both)
- 09. Tax Frt/Hnd:_(1) N or B. Should the tax be applied to Both (B) freight and handling or Neither (N).
- Tax Zone (Task 23)
Tax Zones can be placed and used in a number of different places within Profits Plus:
- Division Master (G/L module, Division Master - Task 21, fields 10, 11 & 12) How used: if a sales order is picked up by the customer and field 9 (Cust Pickup) on the first screen of a New Sales Order is Y (Yes), the system looks to the Division Master to determine if a Tax Zone tax should be added to the order. A specific Tax Zone # can be entered; a 0 indicates "no tax"; and if 99999 is entered it dictates to the system to use the Customer's normal tax.
- Customer Master (A/R module, Customer Master - Task 17, fields 48, 49 & 50) How used: if the customer is charged a Tax Zone rate, other than a state tax rate, enter the code. Each customer can have up to 3 additional Tax Zone taxes. If 11111 is entered into one of the 3 fields, this forces a Tax Zone entry by the person entering a sales order.
- Customer Alternate Ship-to B (O/E module, Alternate Ship-to File - Task 19, fields 18, 19 & 20) How used: if a customer has alternate ship-to's, the system looks to the Tax Zone fields for additional taxes.
Owner Master (Customer Service Module, Owner Master -Task 17, fields 20, 21 & 22). How Used: If using the Customer Service Module –
- If an existing owner record is selected on an order in Order Entry & Editing, the tax zones in the Owner Master will be used on the order. If the Owner Master doesn’t have any tax zones, the order won’t have any tax zones and won’t be charged zone tax.
- If a new owner record is being created with the order, the tax zones on the order will automatically be transferred to the new owner record.
Tax Zone Codes: 00000, 11111 & 99999:
- 00000: Stands for NO additional tax, can be entered into Tax Zones A, B & C in Order Entry, AR Customer Master or OE Alternate Ship-to.
- 11111: Forces Operator Entry - this will cause the Tax Zone screen to automatically pop-up on the Collection Screen of a sales order and force the operator to change the "11111" tax zone to a valid Tax Zone. The "11111" can be entered into Tax Zone A, B or C in A/R Customer Master or O/E Alternate Ship-to.
- 99999: Can be used only in the Division Master for Pickup Orders - dictates to the system to look to the Customer and Alternate Ship-to for Tax Zones.
Note: These 3 tax zones DO NOT print on any of the A/P Tax Zone reports.
EXAMPLE OF HOW TO USE TAX ZONES:
There are three divisions in 3 different taxing authorities (i.e. Divisions in Washington D.C., Virginia and Maryland).
- Fairfax, VA has a local tax of 1%. If the Washington division/location delivers merchandise to a Fairfax customer, then the order should include both the VA states tax plus the Fairfax local tax of 1%.
- All pickup orders sold out of the Fairfax division/location have the 1% local tax applied, regardless of who is buying the merchandise.
1. Setup a Tax Zone number in AR Task 23 (Tax Zone) for each division with a rate for the Fairfax local tax rate of 1%.
Selling Tax Tax
Tax Zone Division Desc. Report Title Rate Basis Frt/hnd
DC 00555(i.e.) 01 FAIR Fairfax Local Tax 1 T N
VA 00555 02 FAIR Fairfax Local Tax 1 T N
MD 00555 03 FAIR Fairfax Local Tax 1 T N
2. To handle the pickup orders sold out of the Fairfax location, change the Tax Zones in the GL Division Master (Task 21 in GL module) for Division 2 - Fairfax, VA - as follows:
field 10 - Pickup Tax A: 00555 Fairfax Local Tax
field 11 - Pickup Tax B: 00000 No tax
field 12 - Pickup Tax C: 00000 No tax
Do not change the fields on the other two divisions (Washington & Maryland)
3. For every customer in Fairfax, change the Tax Zone in the Customer Master (Task 17 in AR module) as follows:
field 48 - Tax Zone A: 00555 Fairfax Local Tax
field 49 - Tax Zone B: 00000
field 50 - Tax Zone C: 00000
(Hint: to get a list of Customer's by state, go to the AR module, Customer Listings-Task 16, Customer by State/Name - Option 3)
4. For every Alternate Ship-to address with a Fairfax address, change the Tax Zone in the Alternate Ship-to File (Task 19 in the OE module) as follows:
field 18 - Tax Zone A: 00555 Fairfax Local Tax
field 19 - Tax Zone B: 00000
field 20 - Tax Zone C: 00000
(Hint: to get a list of Alternate Ship-to's by state, go to the AR module, Mailing/Label Control-Task 25, Generate Mailing Labels from O/E ship-to File-Option10)
*REPORT CODES (field 05):
The Report Code field will populate with the information originally entered as the Zone # (field 01). However, this field can be changed and used as a report option on the “Tax Zone Summary by Division #/Zone/Date Range report, found in2/10/14. Changing the information in field 05 can be useful in two specific situations:
- A state implements alphanumeric codes to go along with the previous numeric codes.
- When more than one tax authority uses the same codes (i.e. both New York and Maine have a zone ‘1000’)
Scenario for usage: Onondaga County in New York, as an example, has the existing tax zone 03102, however the State of New York requires a new alphanumeric zone number because designated areas in the county are in a “qualified” zone – meaning those areas are charged tax at a different rate.
- adding another Tax Zone, 13102 (the “1’ in front of the normal tax zone for Onondaga County will group all the “qualified” zones together for reporting purposes, plus there is the numeric link to the original county tax zone)
- entering K3102 – the alphanumeric tax zone assigned by the State of New York – in the Report Code field (#05).
Therefore by using the Description as a look-up when entering a customer, ship-to or manually picking tax zones, both the tax zones for Onondaga will appear (03102 and 13102) and the appropriate on can be picked. Plus when the Tax Zone Summary report is produced, the option to print by Report Code can be used and K3102 (the newly assigned tax zone number) can be selected.