Sales Tax System Startup Checklist


The current revision of Stream II supports the posting of Sales or VAT tax collected by Tax Authority.  A Tax Authority can be defined as a country, city, county, state or other entity to which taxes must be reported or paid.  The system allows you to define which general ledger account will be updated each time tax is collected for a specific taxing district.  This functionality allows you to post sales tax or vat individually by taxcode, or to group and post sales taxes for multiple tax codes to a single account in the general ledger.   

 During the Sales Posting process, the system scans the Taxcode records used on each invoice being processed.  The system then finds the appropriate Taxcode record in the Taxcode Table to determine if the AUTOPOST field in the Taxcode record is loaded.  If the AUTOPOST field in the Taxcode record is loaded, and if the autopost number assigned to the record is in the valid range of 3700 –3799, the system uses the Taxcode record to located and determine the GL account to be posted with the amount of tax collected.  If the AUTOPOST field in the Taxcode record is not loaded, or if the autopost number in the record is not in the valid range, the system uses the 370 autopost number when posting the sales tax amount from the invoice to the General Ledger.  This logic makes the enhancement compatible with older revisions of the system and it ensures that this new feature is not activated until the Taxcode records have been updated.  Existing installations (which should have only one sales tax autopost of 370) will continue to use that autopost until the Taxcode records are updated even if they run the newer sales posting programs.


Definition of Terms

 The following information is taken from the Sales Tax Application Overview and is presented here for convenience.  Please see the Sales Tax Documentation for more detailed information about the Sales Tax System.

Taxtype:  The Taxtype field is used to define the type of customer being processed for tax purposes.  The Taxtype field is used along with the Taxcode field, the item tax flag and the item tax category to determine if a specific invoice or invoice line should be taxed and the rate to be charged.   Standard Taxtypes used on the system in the US include “RETAIL” (taxable), “RESALE”, “GOVT”, and “EXPORT” (all non-taxable).  Each Customer and Shipto address must have a valid Taxtype assigned to it and the Taxtype used on a specific invoice determines if the sales tax will be charged on the invoice.

Taxcode: The Taxcode is used to determine the tax rate that should be charged for the sale of items into a particular geographic region.  A particular geographic territory can have more than one tax rate and therefore more than one TAXCODE.  The Taxcode can be based on either the item being sold or the customer purchasing the item.  Examples of this are: In the US there are various surcharge taxes, for example on new boats. In Austria there is a different tax rate on luxury items vs. normal items.  In Switzerland there are different levels of tax on sales made to different types of resellers.  Taxcode records are set up in the Taxcode table with the total rate appropriate for each taxing authority.  The taxcodes can then be loaded into the zipcode table to allow the system to automatically determine the correct taxcode (and corresponding taxrate) for each customer or shipping address based on the zipcode.  The Taxcode can also be manually specified from a table for situations in which assignment by zipcode is not valid (for example, overseas shipments where postal code is not maintained in the zipcode file, Vat situations where rate is based on criteria other than shipping location, etc).  Each Taxcode record stores the rate to be used for the taxcode and it also stores a flag to indicate whether shipping charges are taxable when a particular taxcode is used.  This “Tax Shipping” flag allows you to handle situations where shipping is subject to tax in one state (Texas) and is not taxed in other states (California).  The Taxcode record also stores an autopost number and this field can be used to specify the GL sales tax liability account to be updated during the sales posting process.  If an autopost number is not specified in a taxcode record, the system default of 370 will be used when posting the liability for the taxcode.

Automated TAXCODE Assignment – As indicated above, the system may be configured to automatically load the TAXCODE field in customer and ShipTo addresses.  If the system control parameter TAXZIP01 is set to "Y", the system will check the zipcode entered by the operator when a new customer or shipping address record is being created.  The system looks up this zipcode in the zipcode table and it returns the taxcode assigned to the zipcode to the new customer or ShipTo address.  Utility programs are also available to allow backloading or automated assignment of taxcodes to older or converted data.  Please see the Sales Tax Processing Configuration Guide for more information about the system parameters used by this Sales Tax System or for more information about the conversion and utility programs supplied with the system.

Autopost Numbers

The General Ledger is designed to be the central component of a fully integrated accounting system.  This means that other accounting modules post automatically to the G/L.  To accomplish this, autopost numbers are assigned to selected accounts in the General Ledger using the Maintain Account Descriptions program.  These autopost numbers act as a pointer or account identifier for certain accounting programs such as Accounts Payable Entry, and the autopost number or numbers control the General Ledger account or accounts that these programs will post to.  By assigning an autopost number to certain accounts, the system can support varied General Ledger account numbering schemes. 

Web Service based Tax Rate Determination

When this option is selected the system will use a third party web service to determine the tax rate whenever a Customer or Shipto address are created. 

The web service is passed the appropriate address information and returns back the tax rate for the address, a State Code and a County FIPS code.  The system then builds a Tax Code consisting of {Country}{State}{County}{TaxRate} example: USFL071060, where 071 is the county code, and 060 is the tax rate (6.0%).  The Tax Code field will be enlarged to 16 characters support longer codes as required.  The field exists in the files: TaxCode, Company, Shipto, SoHead, SoLine, Invoices, and Transact.

Example: When a new Customer Address or Shipto address is created the system makes a call to the web service, gets the response and builds up the Tax Code.  The system then checks the Tax Code file to see if the Tax Code is present, and if not it creates it.

Utilities: A utility is provided to loop through the Company, Shipto, & Order files to update the tax rates/code on demand when a tax rate change is announced.  She utility can be run by state to select which records are updated.

12/03/10: Gencode - State Table: Added field use to default TaxCode records when creating from web service. Data6 = Tax Shipping Flag (Y/N), DataN1 = Sales Tax Autopost when posting sales tax by state.

Tax Code Web Service: Added support for Service Objects Fast Tax web service.  If policy F248:TAXWEBS = "Y" and F248:FASTTAX# contains an authorization code from Service Objects the system will auto create tax code records with current rates and assign them to Company and Shipto records as they are entered.  This eliminates the need to manually maintain the Tax Code table, and purchase tax code information from third parties.  Service Objects pricing currently starts at $ 60/month for up to 1000 lookups.  Code is implemented when user enters zip code when setting up Company or Shipto record.  Future code will provide ability to select range of Companies/Shipto records and tax code records to update to handle tax changes.  System automatically creates tax codes with format: USxxyyyrrrrrr where xx is the state, yyy is the FIPS county code and rrrrrr is the tax rate.  Currently only US tax rates are supported.  When tax codes are created they use the default values for Sales Tax Autopost and Tax Shipping from the State gencode record.

Minor Update 41: Widened Tax code field in files from A8 to A16 characters to support newer style tax codes created by Tax Web Service (See Sales Tax Apnote). Note: This update can take a long time based on the size of your database and is only automated on Native and MS_SQL databases.  Faircom databases require manually updating the files using DBBuilder.

Files effected are: 46,54,58,61,64,80,82,83,99




Vendor Management (VM)