Set up a tax category table in the Gencode file

Create a code in this table for services that are taxed differently based on state.  Assign this code to all service or labor items that are taxed differently by state in the Inventory Master program.  The Tax category codes are maintained in a Gencode table (F70:203) in order to restrict the information that can be used when assigning tax categories to inventory items.  An example of a Tax Category Table is shown below.

Table used to categorize items for sales tax purposes.  One record should be entered into this table for each of the tax categories that you wish to maintain on the system.

Table Name

Code

Description

F70:203

Service

Service items taxed by State

F70:203

Normal

Normal item taxable based on inventory taxable flag.

Set the Inventory Taxable Flag to N (meaning it is normally nontaxable) for all service and labor items in the service tax category.  This step can be completed in the Inventory Master program.

Set up the exception tables for the Tax Categories in use

This is done by creating Generic code tables with the Table Name = TAXEX-XX, where XX is the two letter abbreviation for the state that the record applies to.  The code field of the Gencode records should be set to the tax category code assigned to the inventory items.  The DATA_1 field of the Gencode records should be set to Y or N to indicate whether the item is taxable in the state pointed to by the exception record.  In the above example, you would have one record in the F70:203 table (for the service tax category) and 4 tables with one record each for the state exceptions.

Table used to handle Service Exceptions (states where services are taxed).  One record should be entered into this table for each state/tax category exception that needs to be supported.

Table Name

Code

Description

Data1

TAXEX-GA

SERVICE

Taxable Service

Y

TAXEX-TX

SERVICE

Taxable Service

Y

TAXEX-VT

SERVICE

Taxable Service

Y

TAXEX-PR

SERVICE

Taxable Service

Y

This table would cause the system to update the tax flag on the inventory items assigned to the service tax category to Y when shipments are sent to shipping addresses with the state field equal to GA, TX, VT or PR.  This information would override the inventory item taxable flag (which is set to N), and cause the system to charge tax on the service items when shipments to these states are processed.