Next Level Tax Code
Enter a value to be used as the next level tax code for this record. The system uses the Next Level Tax Code rate and the Tax Code rate to calculate the total amount of tax for an order or an invoice.
For example, suppose the following tax codes were entered on the Tax Codes form:
| Tax Code | Type | Rate | Next Level Tax Code |
|---|---|---|---|
| Franklin | Municipal | 1% | Ohio State |
| Ohio | State | 5.75% | Federal |
| Federal | Federal | 5% |
Whenever Franklin County sales tax is added to an order, both Ohio and Federal sales tax are also added. To accomplish this, Ohio is entered into the Next Level Tax Code field for Franklin County, and Federal in the Next Level Tax Code on the Ohio Tax Code record.
If Franklin County is listed in the Tax Code field for Customer 3, and an order is added for Customer 3, the Total sales tax calculated on this order is:
| Tax Code | Taxable Amount and Rate | Tax |
|---|---|---|
| Franklin | $110 (1 %) | $1.10 |
| Ohio | $110 (5.75%) | $6.33 |
| Federal | $110 (5%) | $5.50 |
| Total Sales Tax | $12.93 |
Note: For multi-level
taxes, the system calculates tax amounts and rounds at each level separately.
The tax for each level is then added together to determine the total sales
tax.