National Program taxing

As you establish system records for vendor, customer, product, kits, general ledger, ensure the correct settings are specified to enable accurate tax calculations.

Depending upon geography, sales taxes work differently in terms of who pays, collects, and submits tax proceeds to their governments.

United States

In the United States, only the end consumer is responsible for paying sales tax; except certain types of end consumer organizations like non-profits. The party selling to the end consumer is responsible for collecting taxes and submitting proceeds to the appropriate tax authorities.

Distributors in the United States provide exemption certificates to their suppliers indicating they are resellers, which exempts the distributor from paying sales tax. Similarly, retailers who sell to end consumers provide distributors with exemption certificates so they are not charged sales tax on their purchases. Dealers then charge their customers sales tax and submit proceeds to the appropriate tax authorities.

Some Distributors in the United States may sell directly to end consumers. For example, building material Distributors may charge, collect, and submit sales tax on sales made to contractors because, in this scenario, contractors are considered the end consumer. Sales tax is built into final housing prices.

Canada

In Canada, sales tax is charged on all transactions in the supply chain. Manufacturers charge, collect, and submit taxes on sales to Distributors. Distributors charge, collect, and submit taxes on sales made to Dealers, and finally, Dealers charge, collect, and submit taxes on sales to end consumers. Organizations that are tax exempt under Canadian law provide their suppliers with exemption certificates that excludes them from being charged sales tax on their purchases.

National Program Sales Tax:

National Program line items are zero priced on Distributor to Customer [Dealer] transactions, so no sales tax is charged on these transactions. However, sales tax will be included on OE Correction (CR) claim orders based on the taxability and jurisdiction of the Dealer.

OE Correction (CR) claim orders are created in Sales Entry Invoice Processing Report for National Program lines. That process includes copying the tax flag and tax authority information from Customer [Dealer] orders to the claim orders. The net liability each entity owes to the government is the difference between what they paid and what they collected across all transactions.