P&I and Cash Accounting

It is common for tax authority to practice cash accounting for certain situations. For example, perhaps your implementation is a state revenue agency collects sales tax revenue on behalf of counties in your state. You may only distribute the revenue to the counties after the payment is made and not at the time of posting the assessment.

When dynamic credit allocation is practiced, where amounts are directed specifically to tax, penalty, interest and fees in a specific order, the allocation of credits to the various debt categories must be performed before any updates to the general ledger can be made as a result of cash accounting.

The base product provides an obligation type plug-in spot Cash Accounting True Up where an implementation may plug-in the algorithm that makes all necessary adjustments to the general ledger to transfer amounts from "holding" general ledger accounts to true payable accounts.

This algorithm is executed by the Calculate P&I service provided with the product when invoked with an "update" action. The service determines if the obligation type supports the P&I plug-in and if so, executes it. If the obligation type has a Cash Accounting True Up algorithm, it is then called, regardless of whether the obligation type supports P&I.

It means that any update to the system that impacts a taxpayer's financials where either P&I or Cash Accounting may be affected, the Calculate P&I service should be called. The business service is C1-CalculatePenaltyAndInterest.