Working with Item Tax Exemptions (WITX)
Purpose: Use the Item Tax Exemptions function to define tax exemptions for items based on their tax status in certain U.S. states. You can define the exemption for individual items or classes of items; exemptions can specify that items are either taxable or tax exempt, whichever is the exception to the norm. The item tax exemptions function also lets you define a dollar level at which an item's tax status changes.
For instance, you would use this function if:
• a class of apparel you sell is taxable only in three states
• a particular item is taxable only up to a certain dollar amount
• with few exceptions, your merchandise is taxable in all states
Note: If you use an external tax system, the item tax exemptions you set up with this function are not used. You must set up all tax exemptions in the tax system. See Vertex Setup and Avalara AvaTax Setup.
In this chapter:
• Work with Item Tax Exemptions Screen
• Create Item Tax Exemption Screen
• Change Item Tax Exemptions Screen
• Display Item Tax Exemption Screen
For more information: You can create tax exemptions and exceptions for items in Canadian provinces through Working with GST Tax Exemption Status (MGTX). You can use the Work with Items/SKUs menu option to flag an item as VAT-exempt; see Create Item (Base Information) Screen or Create SKU 1 of 2 (With Overrides) Screen.
Work with Item Tax Exemptions Screen
How to display this screen: Enter WITX in the Fast path field at the top of any menu, or select this option from a menu.
Field |
Description |
St (State) |
A code that represents the state where an item tax exemption applies. State codes are defined in and validated against the state table, which is accessible through the Work with Countries menu option; see Setting Up the Country Table (WCTY). Alphanumeric, 2 positions; optional. |
Cmp (Company) |
A code that represents the company carrying the item. The code of the current company appears in this field as the default. Numeric, 3 positions; optional. |
Class |
A code that represents a group of similar items. Alphanumeric, 3 positions; optional. |
Item |
A code representing a unit of inventory. Alphanumeric, 12 positions; optional. |
Exempt |
This code represents whether the item is tax exempt. Valid values are: selected = The item is tax exempt. unselected = The item is not tax exempt. |
Tax Value |
The dollar value up to which the item is taxable. If the value in the Exmpt field is N, the portion of the item price up to this value taxable; the portion of the item price above this value is tax exempt. Numeric, 9 positions with a 2-place decimal; optional. |
No Tax Value |
The dollar value that is tax exempt. If the value in the Exmpt field is N, and the item price is this value or less, the item is tax exempt; if the item price greater than this value, then the amount of the item price that exceeds this value is taxable. Numeric, 9 positions with a 2-place decimal; optional. |
Screen Option |
Procedure |
Change an item tax exemption |
Select Change for a tax exemption to advance to the Change Item Tax Exemptions Screen. |
Delete an item tax exemption |
Select Delete for a tax exemption to delete it. |
Display an item tax exemption |
Select Display for a tax exemption to advance to the Display Item Tax Exemption Screen. |
Create an item tax exemption |
Select Create to advance to the Create Item Tax Exemption Screen. |
Create Item Tax Exemption Screen
Purpose: At the Work with Item Tax Exemptions Screen, select Create.
Field |
Description |
Country |
A code that represents the country in which an item tax exemption occurs. Country codes are defined in and validated against the Country table; see Setting Up the Country Table (WCTY). Alphanumeric, 3 positions; required. |
State |
A code that represents the state in which an item tax exemption applies. State codes are defined in and validated against the state table, which is accessible through the Work with Countries menu option; see Setting Up the Country Table (WCTY). Alphanumeric, 2 positions. Create screen: required. Change screen: display-only. |
Company |
A code that represents the company you are currently working with. Numeric, 3 positions; display-only. |
Item class |
A code that represents a group of similar items. Item class codes are defined in and validated against the Item Class table. See Working with Item Classes (WICL). Alphanumeric, 3 positions; optional. |
Item |
A code representing a unit of inventory. Item codes are defined in and validated against the Item table. Note: You can select either an item class or an item, but not both. Alphanumeric, 12 positions; optional. |
Exempt |
A code indicating whether the item is tax exempt. Valid values are: Selected = The item is tax exempt. The system does not use the Tax value or No tax value entries at this screen. Unselected = The item is not tax exempt. The system uses the Tax value and No tax value entries at this screen to determine the amount of tax to charge. |
Tax value |
The dollar value up to which the item is taxable. The portion of the item price above this value is tax exempt. The value in the Exempt field must be unselected for this field to work. Example: You sell an item for $250.00, and its Tax value is $200.00. If the regular tax rate is 5%, the system charges tax for the Tax value of $200.00, or $10.00. The remaining $50.00 that exceeds the Tax value of $200.00 is not taxed. Note: You cannot enter both a Tax value and a No tax value. Numeric, 9 positions with a 2-place decimal; optional. |
No tax value |
The dollar value that is tax exempt. If the item price is this value or less, the item is tax exempt; if the item price is greater than this value, then the amount of the item price that exceeds this value is taxable. The value in the Exempt field must be unselected for this field to work. Example: You sell an item for $250.00, and its No tax value is $200.00. If the regular tax rate is 5%, the system charges tax for the $50.00 that exceeds the No tax value, or $2.50. The first $200.00 is not taxed. Note: You cannot enter both a Tax value and a No tax value. Numeric, 9 positions with a 2-place decimal; optional. |
Change Item Tax Exemptions Screen
To change: Select Change for an item tax exemption at the Work with Item Tax Exemptions Screen to advance to the Change Item Tax Exemption screen. You can change any field at this screen except the State or Company. See Create Item Tax Exemption Screen for field descriptions.
Display Item Tax Exemption Screen
To display: Select Display for an item tax exemption record at the Work with Item Tax Exemptions Screen to advance to the Display Item Tax Exemption screen. You cannot change any information on this screen. See Create Item Tax Exemption Screen for field descriptions.
