State Tax Calculation

Overview

The State Tax calculation process in BusinessPlus is designed to automatically create tax payments in the Accounts Payable system when use tax needs to be paid to the state. The process compares the tax rate paid to a vendor with the client's home rate and creates a new record containing the use tax payable to the state. The tax rate paid to the vendor is indicated by the tax code placed in the Accounts Payable Set record (tax code is defined with the SYTX common code). The client's home rate is defined on the common code SYTX/STATE.

Common Codes Setup

Open Hold Tax Table

Common code OHTX/TABLE1 is defined to automatically generate use tax records to be paid to the state. This is the master entry used to define information to create additional payable entries in an Accounts Payable Set. The system will create records based on the Tax Code values in an Accounts Payable Set. If the rate for the Tax Code used is different than the home tax rate, the system creates a record for the difference and uses the information defined in this common code. This new record is placed into the Accounts Payable Set at Set Proof time.

State/County Tax Rate Master

Common code SYTX/STATE is what the system uses to determine the home tax rate when use tax entries are created in an Accounts Payable Set. If the Tax rate for the Tax Code entered on a transaction is more or less than the rate on this common code, the system automatically creates use tax records for the difference.

Tax Rate

Common code SYTX/XXX is used to specify tax rates other than the home tax rate. Any tax rate that may be applied to items on Purchase Requisitions, or EN batches if extracted to AP, should be entered in common codes at installation time or when needed. An SYTX common code must be created for each tax rate which you might be billed.

Some sites have both state and county tax. In this case, on the EN Create/Update Set (ENBTUB) page, enter the state tax in one of the Tax Cd fields and the county tax in the other. This allows for separate postings of the Tax Payable due or the Tax Receivable due in the Accounts Payable module. The Encumbrance system does not encumber tax separately

No Sales Tax

Use common code SYTX/YYYY to identify a No Tax Rate.

Automatic Tax Record Creation

Common code APBP/TAXTYPE turns on the option to have the system automatically create use tax records at the time a Set proof is run in Accounts Payable.

Multiple Home Rates

Overview

Multiple home tax rates may be determined by either the General Ledger Key, Key background part, or Miscellaneous Code entered by the user at data entry time. The proper home tax rate will then be used in the comparison with the tax rate paid to the vendor. Because the home tax rate is determined by a value on the Accounts Payable transaction, reports may be run to show all payments involved with a given home tax rate.

Setup

To inform the Automatic Tax Calculation process that you intend to have multiple home rates, place "KEY" or "MISC" in the third Associated Description of the OHTX/TABLE1 common code. If the third Associated Description is left blank, the system will operate using one home tax rate. Placing a value of "KEY" indicates that the home rate will be based on a GL Key or background part of the GL Key. Placing a value of "MISC" indicates that the user will identify the home rate by placing a code in the Miscellaneous Code field of the Accounts Payable batch record. Note: The Miscellaneous Code field can be made a validated field using the Accounts Payable General Information screen (APOHUPGN). If validated, Miscellaneous Codes need to be defined using the common code OHMC/XXXX.

If the home rate is based on the GL Key, you must also specify which key part is to be used by placing its background part number in the first Numeric Value field of the OHTX/TABLE1 common code. For example, if the home rate should be based on the "SITE", and "SITE" is the third background part of the Key, then place a "3.00000" in the first Numeric Value field. If the first Numeric Value field is left blank, and you have chosen "KEY", then the system will use up to eight characters of the key itself to determine the home rate.

Each home rate must also be defined in common codes using the OHTX common code. The code value of these common codes will be the GL Key part value if you selected "KEY", or the four-character Miscellaneous Code if you selected "MISC." The tax rate should be entered in the first Numeric Value field. For example, 8.6% would be entered as "8.60000".

Examples:
A client has two home rates (7.75 and 8.25) and has chosen to specify the home rate with a Miscellaneous Code. They would like to identify the rates by EAST and WEST, which refer to the part of the county where the purchase was made. On the OHTX/TABLE1 common code, they would place "MISC" in the third Description field.
They would then need to create two new common codes: OHTX/EAST and OHTX/WEST. On the OHTX/EAST common code, they would place "7.75000" in the first Numeric Value field. On the OHTX/WEST common code, they would place "8.25000" in the first Numeric Value field.

Note: If Miscellaneous Codes are being validated, additional common codes of OHMC/EAST and OHMC/WEST must also be created.

Process

When payment is made, the home rate will be determined by either the GL account (KEY) or the Miscellaneous Code (MISC). The tax rate that is paid to the vendor is entered into the first tax code field of the Accounts Payable batch screen. If no tax code is entered, then no use tax will be calculated. If you have chosen the "KEY" method, then the home rate will be based on the General Ledger account entered. If, however, you have chosen the "MISC" method, you must enter the code for the appropriate home rate in the Miscellaneous Code field. If the Miscellaneous Code field is left blank, then the system will default to the home rate defined in the SYTX/STATE common code.

Continuing with the example from above, a payment is made from the East side of the county to an out-of-state vendor. The vendor did not charge any sales tax; therefore, the full use tax amount is payable to the State. A tax code of "NO" is entered into the first tax code field, and a Miscellaneous Code of "EAST" is entered to indicate the home tax rate. The payment record may be seen below. When the use tax calculation process is run during the Set proof, an additional record is added to the Set for payment of the use tax to the state.