Simple Sales Tax setup

We are in the process of upgrading to E10, but still a couple months out. We plan to use Tax Connect once we transition, and in the meantime we need something simple(I understand taxes are very complex) to so we can charge customers sales tax. I’m being asked to look into something simple we can do for customers in our state. A simple band-aid solution we’ll use for the next couple months is all we are after.

Any suggestions?

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It can only be as “simple” as your state’s (and local jurisdictions) tax rules are.

The tax system built-in to E9 should suffice - we used it for a couple of years on V8, before switching to TaxConnect.

I’d suggest trying to do the absolute minimum, when it comes to taxing jurisdictions. As these won’t be used when you eventually switch to tax connect. You may want to go ahead and setup tax categories if you know the areas you sell into have special rules. For example, some of the areas we sell into have different rates for merchandise, services, and rentals. So we have separate Tax Cats for those.

@ckrusen thanks so much for the pointers. Any suggestions for some who is brand new at this. That is where could we learn more about the E9 tax system - where are the screens, what fields to fill in, etc.

We actually never used E9 (We jumped right from V8 to E10) and don’t recall any more details than I said above.

@ckrusen how did you know what tax rate to charge for a given order. More specifically are tax categories setup by ship to address so the right tax rate is automatically deducted or were people using some kind of reference as to what tax rate to charge based on a ship to address ?

First off… Your company has to be authorized by the taxing authorities that you collect sales tax for. This is so the authority knows that you’ll owe them money if you collect taxes in their name.

Someone in your company has to know what the tax rates and jurisdictions are for where it is being shipped to. This is the beauty of TaxConnect. As long as the Ship To address can be validated by TaxConnect, it will automatically create the required E10 entries for the Tax Type. Without TaxConnect, someone must create the Tax Type in E10.

It’s been a while since we manually setup taxes (i.e. before enabling TaxConnect), and that was back in V8. Wen we migrated to E10, we didn’t bring any of the manual settings over, we enabled TaxConnect from the get go.

I think the minimum you need to setup (all can be found in Financial Mngmnt -> AR -> Setup) is:

  • Product Tax Cat - Thes are used to determine the tax rate based on the Goods or Service. We have about 16 categories. These are used for taxes that vary by what the product or service is. 90% of the time we use the Cat “Tangible Personal Property” (which we set as the default). Think of this as the basic Sales tax. If a particular good or service had a special rate, youd make another tax cat for that. Here’s a screen shot showing some of the Tax Cats. Note that TaxConnect actually created these and the CatID is dicated by Avalara. So don’t use any of those codes (or even that format) for your manually setup created codes)

  • Tax Type - This is the “tax” name. Multiple Tax Types can later be assigned to a Tax Liability.
    Typically it’s just the jurisdiction (state, city or locality name). In the shot below, Ardmore is a city in Pennsylvania, while Arizona and Arkansas are obviously states.
    Again, the TaxID’s are created by Avalara, so don’t use any of those or even that format for you manually configured ones.

  • Tax Liability - This is a combination of Tax Types, so you can just select one, Tax Liablity when several taxes apply.

After you setup the Tax Type’s and Tax Cat’s, you use them on order entry and invoicing.

  • Specify the Tax Cat on the order or invoice lines

  • Specify the Tax Liabilty on the release line of orders (because it’s related to the release’s ShipTo address).

In a nut shell, the Tax Liability determines who is charging the tax, and the category deterimes what tax rate. Think of them as a combination.

  • “PA + Persoanl property” = 6%
  • “PHILLY + Personal property” = 6% + 2%
  • “PHILLY + Soda” = 6% + 2% + 1%

(note that Philly’s soda tax is actually on the qty, not the sales price, but that’s way to complicated for this example)

Please don’t take any of the above as gospel, as it’s coming from memory, and I can’t even verify it, because we only have TaxConnect setup.

There are step by step instructions in the Accounts Receivable manual under setup.

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If you don’t have a lot of customers that don’t have a resellers ID, you don’t need tax connect.

Hello, can you share the download link, please.