Industry tax

Setup summary

• SA Company Setup
  • In the Taxes view, in Tax Method, select Sales Use Tax (SUT). Tax Method is used by the system to determine what taxing logic is used when calculating taxes on sales orders and vendor invoices. Industry tax functionality is limited to companies in the United States that are collecting and reporting sales and use taxes based on sales made in state, county, city, and other jurisdictions in the United States.
  • In Tax Interface, select System Rates. Industry taxing is not available with third-party taxing software. You must manually update and use the tax rates in the System Administrator tax tables in the system.
  • Select the option, Allow Expanded Tax Groups. This option is available only when Tax Method is set to Sales Use Tax (SUT) and the Tax Interface is set to System Rates. Changing either of these settings clears this option. Selecting this option enables the use of the expanded tax groups 6-99, which are set up in SA Table Code Value Setup-Tax Groups. Sign out and sign back into Distribution SX.e to activate this setting.

• SA Table Code Value Setup
  • Tax Groups are special codes that identify special taxing needs. 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, and are primarily for industry taxes. In SA Table Code Value Setup, select Tax Groups from the Table List. Click New and specify your two-digit tax group and an eight-character description. Repeat steps to create multiple tax groups.
• SA Sales Use Tax Setup
  • Industry tax records are created in SA Sales Use Tax Setup and are based on the Type, in combination with the associated expanded tax group. As is normal with SA Sales Use Tax Setup, if your industry tax is at the city level, you must create and save prerequisite records in order to create a more granular record. For example, create a State record first: Type=State, Group=<expanded tax group>. Then, create a County record: Type=County, Group=<expanded tax group>, State, County, Description. Then, create a City record: Type=City, Group=<expanded tax group>, State, County, City, Other, Description.
    Caution: 
    When creating a new city level industry tax, the name in the City field must match the name in the City field of your Standard tax group. The values in the Description fields can be similar, but must not match.
  • As you create a record, specify the tax master identification, amounts, rates, and taxing jurisdiction for the record. Optionally, you can specify a Flat Excise Amount that is levied based on the Taxation Weight. You must have specified a Taxation Weight for the industry-tax related products in Product Setup or Product Catalog Setup.

  • Optionally, in SA Sales Use Tax Setup-General Ledger, you can assign a specific Excise account for your industry tax. Industry tax is calculated and stored as Excise amounts during the flow of information to tax audit file (ARETT) records and the updating of the General Ledger during Sales Entry Invoice Processing Report and Cash Receipts.

• Product Setup
  • Optionally, you can calculate an industry tax by weight. In Product Setup-General-Logistics, specify the Taxation Weight for the industry-tax related product. For example, if the tax is based on ounces of soft drink, specify the ounces of soft drink for the product in Taxation Weight field. When taxes are calculated, the value in this field is used in the calculation. The default value is 1.00000. Be aware that the Taxation Weight is differentiated from the actual Weight of the product because the two weights may not be the same, and because the actual Weight may be used to calculate non-tax-related amounts.
  • Repeat this setup for Product Catalog Setup-General-Logistics.
• Product Warehouse Product Setup
  • In Product Warehouse Product Setup-Taxing, you can select the appropriate expanded tax group for this record from the Tax Group field. Any expanded tax groups added with SA Table Code Value Setup are included in this list.
  • Repeat this setup for Product Lines Setup.

Calculation summary

Planning and coordination is required to set up the product data. Because of the flexibility of this feature, the more effort you put into planning and setup, the more successful you are in effectively using industry tax functionality. How and how many tax groups you create can depend on what industry tax you collect. How you set up tax records can depend on what jurisdiction levels require industry tax and what rates or percentages they require. These requirements influence how you set up your tax records and product stocking units. A particular industry tax requirement may mean that you use the Taxation Weight, another may not. Products may also be subject to other taxes, in addition to the flat excise amount. All of these considerations play a part in determining how the tax is calculated. This table shows various examples of industry tax configurations and calculations:

Tax Group	Tax Record	Order line quantity	Product Setup: Stocking UOM (line conversion rate=1)	Assumed taxation UOM	Product Setup: Taxation Weight (total in taxation UOM)	SA Sales Use Tax Setup: Flat Excise Amount	SA Sales Use Tax Setup: Apply To	Total
Tobacco cigarette	State	1	1	each	1.00000	0.65	Unit	$0.65
Tobacco cigarette	Federal	1	1	each	1.00000	1.01	Unit	$1.01
Tobacco cigarette	State	10	1 carton	each	1.00000	0.65	Unit	$6.50
Tobacco cigarette	State	1	1 carton	ounce	10.00000	0.65	Taxation Weight	$6.50
Tobacco smokeless	State	2	1.2 oz	ounce	1.20000	0.92	Taxation Weight	$2.21
Soft drink	City	1	6 pack	ounce	72.00000	0.005	Taxation Weight	$0.36
Soft drink	State	1	6 pack	ounce	72.00000	0.0175	Taxation Weight	$1.26
Soft drink	City	2	6 pack	ounce	72.00000	0.005	Taxation Weight	$0.72
Soft drink	State	2	6 pack	ounce	72.00000	0.0175	Taxation Weight	$2.52

Workflow summary

Industry tax is calculated during normal Sales Order Entry workflow, whether entering a new order or maintaining an existing one. In Selected Products, the Taxation Weight and Tax Group fields are displayed in the Extended Fields section. Taxation Weight is populated from the Product Setup record. Tax Group is populated from the Product Warehouse Product Setup record. These fields are editable. Depending on operator security set up in SA Operator Setup, your Customer Service Representative (CSR) can override the tax group that defaults to an order using the Tax Group field. Review your workflow so your procedural tasks reflect how you modify the Taxation Weight and Tax Group in the Extended Fields. Your CSR should only override or modify these values for approved reasons. For nonstocks, which have no associated product record, CSRs must use these fields to specify an industry-tax-related Taxation Weight and Tax Group for the line.

If your CSR has the security to create inventory records from catalog records through Sales Order Entry, and a catalog product is set up with a valid product line, during order entry of a catalog product, a message may be displayed: Create Catalog Product in Inventory? If Yes is clicked, the catalog product is changed into a stock product. Then, a Product Setup record and a Product Warehouse Product Setup record are created, the Taxation Weight value is copied to these records, and the line item is treated as a special order. Be aware that the appropriate Tax Group must be manually specified for this industry-tax new catalog-turned-stock product in the Product Warehouse Product Setup.

In Taxes & Totals, the industry taxes for the order are displayed in the Tax Detail section. There, you can view all of the tax types and amounts. Industry tax are displayed in the Excise Amount column. The rollup for the taxes is displayed in the Totals section.

The Taxation Weight for an order line is displayed in Sales Order Inquiry-Line Detail-Extended-General. The Tax Group is displayed in Sales Order Inquiry-Line Detail-Extended-Taxing. In Sales Order Inquiry-Taxes, the Tax Details grid shows data from the tax audit file (ARETT) record, similar to that data shown in the Sales Order Entry-Taxes & Totals.

The order is picked, shipped, invoiced, and paid according to your normal order processing. You can research any out-of-balance conditions with the Sale Order Audit Report. Use SM Government Tax Recalculation Report for an open order affected by a change to an industry tax weight or excise amount. The report recalculates and balances before invoicing. The SM Government Tax Register Report summarizes the taxes calculated for sales orders and lists them by tax jurisdiction, providing a total for each jurisdiction. Use this report to prepare your monthly or quarterly tax reports for the appropriate taxing authorities.

Remember system rates must be kept up-to-date manually. Ensure your procedural tasks include these updates.

Reports summary

When industry tax functionality is implemented, certain tax-related reports show relevant information.

Product Catalog Product Master List Report

The Taxation Weight value specified in Product Catalog Setup is displayed in this report.

Product Line Master List Report

The Tax Group displayed is based on the Product Lines Setup setting. Tax groups are defined in SA Company Setup and SA Table Code Value Setup.

Product Master List Report

The Taxation Weight value specified in Product Setup is displayed in this report.

Product Warehouse Product Master List Report

The Tax Group displayed is based on the Product Warehouse Product Setup setting. Tax groups are defined in SA Company Setup and SA Table Code Value Setup.

Sales Order Audit Report

Processes all tax audit file (ARETT) records for all the tax groups defined in SA Company Setup and SA Table Code Value Setup within the selected taxing jurisdictions.

SA Government Tax Master Report

This report shows the tax rates for all the tax groups defined in SA Company Setup and SA Table Code Value Setup. In the matrix, tax groups are displayed on one axis, and tax rates one the other axis. Totals are also displayed. The Excise Flat Flag shows the tax record Apply To setting, either Line, Unit or Taxation Weight.

SA Table Values Report

Use to report information on expanded tax groups. You can select these records based on the TG record type or as part of a wider reporting range. The report shows the defined expanded tax group numbers and their associated descriptions.

SM Government Tax Recalculation Report

Process all tax audit file (ARETT) records for all the tax groups defined in SA Company Setup and SA Table Code Value Setup within the selected taxing jurisdictions. These records are used to determine a list of qualifying orders, then those orders are retotaled, and taxes recalculated.

SM Government Tax Register Report

Process all tax audit file (ARETT) records for all the tax groups defined in SA Company Setup and SA Table Code Value Setup within the selected taxing jurisdictions. These records are used to determine a list of qualifying orders for printing. This report is sorted by tax group, then by state, therefore industry taxes are sorted and reported separately from the other tax groups.