Tax groups
Tax Groups are special codes that identify special taxing needs. They are product- or addon-related. A tax group enables you to address the taxing needs of a product, such as a luxury tax, a hazardous waste tax, or a tax exemption. A tax group enables you to address the taxing needs of an addon, such as freight and handling. Some tax group names are dictated by third-party tax solutions product codes, by Canadian taxing, or by value added taxing (VAT).
Tax groups are used in conjunction with company, product or addon, customer, sales, and tax records to calculate and apply the appropriate tax during sales order entry, and to update General Ledger. Therefore, tax groups must be set up correctly to ensure the tax groups are available to the other modules and that calculations are accurate.
Tax groups 1-5 are set up in SA Company Setup. Expanded tax groups 6-99 can be set up in SA Table Code Value Setup-Tax Groups, but are primarily for industry taxes.
Initiate the setup of tax groups 1-5 in SA Company Setup. Tax Group Name 1 must be named and created first and must establish a base of taxing information. The first group of rates must always be the standard rate that is applied to the majority of items or purchases. Name the standard group in SA Company Setup, then define the standard master, amounts, rates, and taxing jurisdiction in the tax master record, such as SA Sales Use Taxes Setup..
This Standard group must also include all potential combinations that you will create for groups 2-5, so you must plan and coordinate all of the tax groups. A tax group name that is not identified in Standard will not be available to the lookup lists in product, customer, and order records. In the setup of your tax master record, set up a Type-Group and tax rates for each combination; even if the rates are zero in Standard. For example:
| Type | Group | Amounts |
|---|---|---|
| US | Standard | 0.00% |
| CO | Standard | 4.00% |
| ElPaso | Standard | 2.00% |
| COS | Standard | 2.00% |
| Other (Hazard) | Standard | 0.00% |
| Type | Group | Amounts |
|---|---|---|
| US | Group 2 | 0.00% |
| CO | Group 2 | 4.00% |
| ElPaso | Group 2 | 2.60% |
| COS | Group 2 | 2.00% |
| Other (Hazard) | Group 2 | 1.00% |
In the setup of your tax master record, such SA Sales Use Taxes Setup-General Ledger, set up a general ledger account for one or more of the tax groups.
After you have set up your tax groups, you can apply them to products in Product Warehouse Product Setup-Taxing, or to customers in Customer Setup-Taxing or Customer ShipTo Setup-Taxing. Depending on operator security set up in SA Operator Setup, you can override the tax group that defaults to an order using the Tax Group field in Sales Order Entry-Advanced Line Entry-Extended.
For supported third-party tax solutions
If you are integrated with AvaTax, tax groups are set up differently. See the Infor Distribution SX.e Integration Guide for AvaTax for specific information.
If you are integrated with Sovos GTD or Vertex Cloud, and you want to use tax groups to map to addons, you must set up tax groups for products and addons so that they are recognized as such by the integrated tax interface, and taxed according to the rules in each jurisdiction. Create a tax group labeled with the appropriate software product or addon code for tax group 2, 3, 4 or 5. Remember, tax group 1 should always be the standard tax group.
For example, if the product or addon code for freight is 40000, this value should be specified in the Tax Group 2, 3, 4, or 5 field. If the product or addon code is 89999, this indicates the charge or addon should always be tax exempt. Use this product code only for addons that are always tax exempt in all jurisdictions. Refer to Sovos GTD documentation for a listing of valid product codes.
For Value Added Tax
If you have selected Value Added Tax (VAT) as your Tax Method inSA Company Setup, tax groups are flagged as VAT Exempt or not. The VAT Exempt option can be selected for any Tax Group defined in SA Setup Company-Taxes. This eliminates the need to specify a Tax Group named “Exempt” or preface the name with the letter “E”.Use SA Value Added Taxes Setup to set up the tax master record.
For Canadian taxes
Five tax groups are defined by the system that are used when you set up Provincial Sales Tax (PST) tables, and product records. These tax groups represent the various PST and Goods & Services Tax (GST) combinations applicable to Canada and its provinces. Do not change the descriptions or the sequence (1, 2, 3, 4, 5) of these tax groups. The tax groups allow for two PST rates, because some provinces have separate rates for goods and some services.
- 1. PST1&GST: For goods-related PST and GST
- 2. PST2&GST: For service-related PST and GST
- 3. PST1: For goods-related PST only; no GST
- 4. PST2: For service-related PST only; no GST
- 5. GST: For GST only; no PST
Use SA Goods and Services Taxes Setup to set up jurisdiction rates and set up a general ledger account for one or more of the tax groups.
For industry tax
Typically for industry tax, you can use the expanded tax groups 6-99, which can be set up in SA Table Code Value Setup-Tax Groups. You must enable the use of the expanded tax groups by selecting the Allow Expanded Tax Groups option in SA Setup Company-Taxes-Tax Settings. The company setting for Tax Interface must be set to System Rates. The Tax Method must be set to Sales Use Tax (SUT). How many tax groups you use can depend on whether industry taxes are based on the weight of the product and how you set up your product stocking units.