Maintain Tax Codes (IN05)

The Maintain Tax Codes (IN05) program is used to create a record for an individual tax that must be collected through one or more Tax Groups. Each Tax Code is configured with the Descriptions, the Rate of taxation (4 decimal accuracy), the Type of tax (Tax, Tax on Tax, Tax on SKU), the AP Vendor to which the tax is remitted and the GL Account that is updated when taxes are collected.

Once the individual taxes are assigned Tax Codes, they can be assembled together into one or more Tax Groups defined in Maintain Tax Groups (IN06) to apply the tax rules. For more information on IN06, click here.

The following list defines every field in IN05:

• Tax Code - enter or select from the query a Tax Code. Tax Codes can be a maximum of eight alpha numeric characters in length. Tax codes are used to define an individual tax.
  • The coding conventions used for Tax Codes vary based on the tax structure and the number of taxes that need to be collected. Here are some examples based on Canadian and American taxes:
    • Canada:

      Canada's Provincial Sales Tax (PST) codes can be defined using the Provinces' two-character code. For example, you can create 'ON' for the Ontario PST and 'QC' for the Québec PST. The federal taxes are defined as the Goods & Services Tax (GST) and the Harmonized Sales Tax (HST).

    • United States of America:

      The number of Taxes a business in the United States of America is required to collect depends on many factors. If only a few are required, such as only a specific State tax, the Tax Code can simply be defined as the two-character State code. For example, MN for the Minnesota State Tax.

      Where a large number of Tax Codes are required for multiple States, Counties, Cities and specific Product categories within those areas, a more complex coding convention may be required. For example, all of the required State taxes may be defined with Tax Codes that match the state's two-character code - i.e., MN for the Minnesota State Tax. Within the state, the different County taxes may be defined with Tax Codes that are prefixed with the State's two-character code and then followed by a numeric series. In the example below, County taxes are simply assigned a Tax Code beginning with the two-character state code plus a four-digit counter between 1000 and 1999. City taxes begin with the two-character State code plus a four-digit counter between 2000 and 2999. Other taxes within the state are assigned to the 3000 and above range.

      • MN - Minnesota State Tax
      • MN1000 - Hennepin County Sales Tax
      • MN1001 - Plymouth County Sales Tax
      • MN2000 - Minnetonka City Sales Tax
      • MN2001 - Wayzata City Sales Tax
      • MN3000 - Minnesota State Lead Acid Battery Tax

• First Language Description - enter the Description of the Tax Code that displays for transaction totals in Enterprise. You can enter a maximum of 30 alpha numeric characters in this field. This description prints on various forms and reports. For reports such as Print Invoices/Credit Notes (IN42), the Language set up in Maintain Customer Master (SU13) determines whether the First or Second Language Description prints. Note: the Description of a tax is used by the Invoice History system. If an Invoice in history contains a Tax Code that is deleted from the IN05, the Tax Code and amount print but the description does not.

• Second Language Description - enter the Description of the Tax Code in the second language. You can enter a maximum of 30 alpha numeric characters in this field. For reports such as Print Invoices/Credit Notes (IN42), the Language set up in SU13 determines whether the First or Second Language Description prints. Note: the Description of a tax is used by the Invoice History system. If an Invoice in history contains a Tax Code that has been deleted from IN05, the Tax Code and amount print but the description does not.

• Rate of Taxation - the Rate of Taxation is expressed in terms of the 'Type' of tax being maintained. There are three possible Tax 'Types' (see the next field for more details): 'Tax', 'Tax on Tax' and 'Tax on SKU'. For 'Tax' and 'Tax on Tax', the value is expressed as a percentage of the selling price. For 'Tax on SKU', the value is expressed as a flat rate per SKU sold.

  For example:

  Tax	Description	Type	Rate	Value
  ST1000	Sales Tax	Tax	8.0000	8%
  ST3000	Lead Acid Battery Tax	Tax on SKU	100.0000	$100

• Type - enter or select the drop down list a tax Type. The following are valid tax Types:
  • Tax - Tax is calculated based on the sum of taxable sales.
  • Tax on Tax - Tax is calculated based on the sum of taxable sales plus any taxes calculated already.
  • Tax on SKU - Tax is calculated based on the Rate of Taxation multiplied by the quantity shipped of Stock Keeping Units (SKU) on the line.

• Vendor Code - enter or select from the query a Vendor Code. The Vendor assigned to the Tax Code determines to whom the tax is remitted. Vendor Codes are maintained in Maintain Vendors (AP13).
  • In cases where a single Vendor is responsible for collecting multiple taxes, each Tax Code is reported separately under the Vendor on the Tax Remittance Report (IN83). IN83 includes an option to generate an AP Invoice for the amount of Taxes collected within a specified period.

• GL Account for Distribution - the GL Account determines which General Ledger is credited with the sum of the Tax collected from all of the Invoices appearing on the Print Invoice Register (IN44). This GL account is debited by in Enter Invoices AP30 if the 'Generate AP Invoices' option is selected in IN83.
  • If the GL Account for Distribution is dependent on a Sales Office, then the following "GL Mask" structure is to be used: enter 'ss' in variable positions of the GL code, e.g. 0142ss. Enterprise substitutes the 'ss' with the Invoice's Sales Office. Note: Enterprise attempts to validate the GL Account by using the Sales Office assigned to the first customer record on file in Maintain Customer Master (SU13). A GL Account that matches this pattern must exist for the mask to be valid.

  • IN83 stores taxes collected by Tax, Invoice Date and Sales Office. The report can be restricted to a single Sales Office if required.

• Summary Invoice Accrued GL Account - this field displays when the Summary Invoice module in Enterprise is activated. When the Summary Generation Record (SI91) program runs, this GL Account must be present. If the GL Account is not entered in IN05, then SI91 reports the issue and the Summary Invoice produced through Summary Invoice Generation (SI90) will not have the tax applied. For more information on Summary Invoicing, click here.

• Tax Type - enter or select a tax type from the drop list. This is an optional field. The tax type allows you to group tax codes together for EDI purposes. Valid options include:
  • Good and Service Tax (GST)
  • Harmonized Sales Tax (HST)
  • Provincial Sales Tax (PST)
  • City Sales Tax
  • County Sales Tax
  • State Sales Tax
  • No Tax

The following table outlines the functionality of each button on IN05:

Button Label	Icon	Functionality
Update		Updates the Tax Code information.
Delete		Deletes the Tax Code. Caution: The delete functionality does not require you to confirm the delete request. When you click Delete, the record is instantaneously deleted.
New		Clears all fields allowing you to enter a new Tax Code.

^{Maintain Tax Codes (IN05)}