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Tax Amount Verification During Approval

During Approval, Payables automatically verifies all tax information on an invoice and places one or more holds on an invoice if tax exceptions exist. Payables checks for tax variances and, if you match an invoice to a purchase order, it checks for invoice and purchase order tax name variances. If you enable the Enforce Tax From Account option in the Payables Options window, Approval also verifies that for all natural accounts that have tax names associated with them that the tax name is correct.

During Approval, Payables verifies that you have entered your tax distribution(s) correctly. For example, you entered a $108.00 invoice for a $100.00 telephone which was taxed with an 8% state sales tax. The invoice should have one tax distribution for $8, and one item distribution for $100. Both distributions should have the same tax name, and the tax name should have an 8% tax rate. During Approval, Payables verifies that each tax distribution amount equals the sum of the non-tax distributions with the same tax name multiplied by the tax rate assigned to the tax name.

If the tax amounts are not within the tolerances you define, Approval applies a hold to the invoice. In the Invoice Tolerances window you can define percentage or amount tolerances to determine the amount of tax variance you allow on your invoices. If you have defined a percentage tolerance, and the variance exceeds this percentage, Approval applies a Tax Variance hold. If you have defined an amount tolerance, and the variance exceeds this amount, Approval applies a Tax Amount Range hold. Payables releases the Tax Variance or Tax Amount Range hold if you enter a tax distribution with an appropriate name and amount and resubmit Approval.

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