Taxable status

The taxable status of customers and products can be established as taxable, non-taxable (exempt), or variable. The taxable type specified as the default in Customer Setup-Taxing, Customer Ship To Setup, and Product Warehouse Product Setup-Taxing, together with the SA Exemption Setup record determines the taxable status of each order entered in Sales Order Entry.

The taxes are automatically calculated by the system for sales orders and purchase orders. To enable taxing, you must perform setups in several functions.

Generally, the taxable type you specify on a customer record should indicate the customer’s normal taxing status because that status defaults during Sales Order Entry. An order’s taxable status is based on the default combinations of customer and product taxable status. For example:


Taxable Customer	Taxable Product	Result
Taxable	Taxable, Variable	Taxable
Taxable	Non Taxable	Non taxable
Variable	Taxable	Taxable
Variable	Non Taxable	Non taxable
Variable	Variable	Taxable, if no SA Exemption Setup record exists.
Non Taxable	Taxable, Non Taxable, Variable	Non taxable

If the Taxable field is selected in Product Warehouse Product Setup-Taxing, the product is taxed during Sales Order Entry unless the customer is nontaxable. If the Non Taxable field is selected, the product is never taxed. If the Variable Based On Customer field is selected, the product will be taxed according to the results noted in the table. If both the product and customer is variable, the line item is taxable if an exemption record for the customer or customer/product does not exist in the exemption table, SA Exemption Setup. The product is not taxable if an exemption record is present.

Tax overrides

Some defaults can be overridden. You can override the tax status. Product taxable types apply directly to each product record, and can also be overridden.

A customer’s order might contain products with different taxable types. For example, one line item could be taxable, and another could be non-taxable. An order with a combination of taxable and non-taxable line items must reflect a taxable status on the Taxes and Totals view. Line item tax is set on the Extended view.

If a customer is normally taxed on most orders, but on a particular order is non-taxable, you can change the taxing state, locality, and Taxable option in Sales Order Entry in the Taxes and Totals view at any time during order entry.

Overriding taxes on orders should occur infrequently, and you must use caution when overriding the Taxable option on the Taxes and Totals view. Changes to the taxable type roll to all previously entered lines, and taxes are recalculated. The new taxes also apply to new lines entered. Changes to any values on the Taxes and Totals view will automatically change the taxable type to manual. If you select the Tax Override option, then no taxes will be calculated thereafter. You can view any tax exceptions on the Sales Exceptions Report.

Tax exemptions

You can set up a customer or customer ship to as exempt from sales or use taxes for all transactions within a particular state, or exempt from taxes on a specific product or product line. You can also define a specific product or product line as exempt for one or all customers. A tax exempt product is typically resold to a customer, at which time sales taxes are collected from the end user.

If both a customer and product have a taxable type of variable, the line item is taxable unless an exemption record exists in SA Exemption Setup. Exemption records should be created for situations where the customer is generally taxable but is not always taxable. Customer should provide a copy of their tax exemption certificate before you set up an exemption record.

Note: If you are using the third-party Sovos GTD product to calculate taxes, use Sovos GTD's STEP module to determine exemption status. Infor strongly discourages the use of the SA Exemption Setup functionality with Sovos GTD, or AvaTax, or Vertex Cloud. Before using them together, we recommend you engage Infor Consulting Services (ICS) to help plan your implementation.

Order types and tax exemptions

Calculating taxes is a complex process that depends on several factors. This table shows how certain order types and products affect how taxes are calculated in certain situations.


Order type/product	Exception
Blanket Order (BL)	If the order is taxable and lump sum billing is used, taxes are calculated on lump sums and addons according to Tax Group 1 of SA Sales Use Taxes Setup or SA Goods or Services Taxes Setup.
Counter Sale (CS)	Taxes are based on Product Warehouse Description Setup. If a CS is copied to a Stock Order (SO), taxes and jurisdictions are recalculated.
Return Merchandise (RM)	Tax information defaults from the original order if the invoice was entered and is treated as a negative amount.
Nonstock	Order header tax defaults apply.
Catalog	Tax defaults from Product Line Setup are used based on the Product Catalog Setup warehouse, vendor, and product line. If Product Line Setup does not exist, taxes default from the order header.