Working with Customer Tax Status

Purpose: The tax exemptions you can assign to a customer include reseller certificates, exemptions for nonprofit organizations, and exemption from VAT. You can define a customer-level exemption as an override, or resale or exemption numbers in the Customer Tax file for individual states. You can also specify an expiration date for customer tax exemptions. Canadian exemptions currently include exemptions from either Goods and Services taxes, Provincial Services taxes, or both.

Exemption information you define in customer maintenance may default in order entry; depending on the source and nature of this information, you may or may not be able to override it on the order.

In this topic:

• Customer Tax Overview

• First Level: Customer Exemption

• Second Level: VAT

• Third Level: State Exemptions

• Work with Customer Tax Screen

• Create Customer Tax Screen

• Change Customer Tax Screen

Customer Tax Overview

Sample screen: There are three levels of tax exemption information you can set up for a customer that may default in order entry. The relevant fields on the Second Create Customer Sold To Screen are highlighted in the sample below.

CSR0265 ADD Create Cust Sold To (Page 2 of 2) 4/23/97 15:10:11 The Mail Order Company Customer : 12581 Bill to . . Alt cust # . Phone numbers: Day . . Ext. Eve . . Ext. Fax . . Ext. Source: Current . Original : Mail type: Current . C (B,R,C,L,S) Original : C (B,R,C,L,S) Seed . . (Y,N) Ghost . . . (Y,N) Warehouse Associate N (Y,N) Price disc % Price column Tax exempt . . . (E,G,N,P,R,T) VAT number Exempt certif. . Exempt Expiry Pop Up Window #1 #2 Messages #3 #4 E-mail address Job title . . . User fields . . 1 2 3 4 F2=Letter F3=Exit F7=Ship to's F8=Bill to F9=Subscriptions F10=Individuals F11=Contr pricing F12=Cancel F14=Cust tax F15=Mail hist F24=More keys

First Level: Customer Exemption

The first check the system makes in order entry is against the customer's Tax exempt code and Exempt certif (Exempt certificate number) field. Any reseller (R) or exempt (E) information in these fields defaults into the Tax code and Rsl/ex# fields in order entry and, as long as there is not a passed date in the Exempt expiry (Tax exempt certificate expiration date) date field for the customer, will remain on the order header when you press Enter; in other words, if the date field is blank or if it contains a future date, the customer-level tax information will apply.

If the customer has an Exempt certificate number but no Tax exempt code, the certificate number will default in order entry but the operator will need to complete the Tax code field. Setting up a customer record this way may be useful if you want to prompt the operator to evaluate the customer's tax status on an order-by-order basis.

If there is a Tax exempt code of G (GST only) or P (PST only) for a Canadian customer, this information will default in order entry regardless of the value in the Exempt expiry date field.

Important: To override the customer's default tax status in order entry, you should Field Exit through the Tax code and Rsl/ex# fields. This step allows the next level of information to default into the appropriate tax fields. This step is also important if you change the shipping address on the order, as it prompts the system to evaluate the order tax appropriately for the new destination.

Second Level: VAT

The next check the system makes in determining the tax status of an order is against the VAT number field for the customer. An entry in this field indicates that the customer is exempt from VAT, a taxing method that applies in only certain states in countries. When an order is subject to VAT, the customer is charged a tax-inclusive price, and the tax amount is "hidden" on the order detail line for the item, not included in the Tax bucket for the order.

Note: Any of the tax exemptions discussed in this chapter will also exempt a customer from VAT. In the case of an order that would normally be subject to VAT but is determined to be tax- or VAT-exempt, the customer pays the regular (tax-exclusive) price, and neither hidden tax nor regular tax is added to the order.

The system applies the VAT exemption only if all the following are true:

• there is no applicable customer-level exemption information, or you have cleared the tax fields in order entry using Field Exit, and

• the Tax Included in Price (E70) field in the System Control file is set to Y, and

• the sold-to customer's country is different from the country for your company, as defined through the Work with Companies menu option (fast path = WCMP).

If a VAT exemption applies to the order, an E defaults into the Tax code field and the words VAT EXEMPT default into the Rsl/ex# field for the order. In this case, you cannot override the tax status of the order to make it taxable.

Third Level: State Exemptions

The last check the system makes in determining the tax status of an order is against the Customer Tax file. You use the Customer Tax file, available by pressing F14 in customer maintenance, to set up exemption or reseller records for the customer in particular states or provinces. State-specific information from this file will default in order entry only if:

• there is no applicable customer-level exemption information, or you have cleared the fields in order entry using Field Exit, and

• there is not a passed date in the Exempt expiry date field for the customer, and

• a VAT exemption has not defaulted on the order, and

• the state-level record contains exemption (E) or reseller (R) information. No other type of state-level tax record will default in order entry.

Again, you should be sure to clear the tax fields in order entry by pressing Field Exit if you make any changes to the order that may affect its taxability, so you can be sure the appropriate tax information will default. Once a state-level exemption has defaulted onto an order, you cannot override the order's tax status to make it taxable unless you also change something else that may affect the order's taxability, such as its shipping address.

Work with Customer Tax Screen

Purpose: Use this screen to create, change, delete, or display tax exemption information for a customer.

How to display this screen: From any Work with Customer screen, enter 14 next to a customer (see Selecting Customers). You can also advance to this screen by pressing F14 at a Create, Change, or Display Customer screen (see Creating and Updating Sold-to Customers (WCST)).

CSR0047 DISPLAY Work with Customer Tax 5/28/97 12:50:03 EZK Mail Order Customer . . . : 498 CARO, JACKIE Opt Cty State Tax Resale/Exempt# Type options, press Enter. 2=Change 4=Delete USA MA R 1234567890 USA NJ E 0987654321 F3=Exit F6=Create F12=Cancel F21=Print list

Field	Description
Customer	A unique number assigned to each customer who places an order, and the customer's name or company name. Customer number: numeric, 9 positions; display-only, assigned by the system. Customer last name: alphanumeric, 25 positions; display-only. Customer first name: alphanumeric, 15 positions; display-only. Customer middle initial: alphanumeric, 1 position; display-only. Customer company name: alphanumeric, 30 positions; display-only.
Cty (Country)	The country where the customer has a special tax status. Country codes are defined in and validated against the Country file; see Setting Up the Country File (WCTY). Alphanumeric, 3 positions; optional.
State	The state or province where the customer has a special tax status. State codes are defined in and validated against the State file, which is accessible through the Work with Countries menu option; see Setting Up the Country File (WCTY). Alphanumeric, 2 positions; optional.
Tax (Tax code)	The tax status of the customer in the state shown. Enter a valid tax code to display tax records that match your entry. Valid values are: E = Exempt: The customer is exempt from paying any taxes, including VAT, in this state. G = Goods and Services Tax (GST): The customer is a Canadian customer subject to the federal Goods and Services tax only. N = Non-taxable: The customer is exempt from paying state taxes on purchases. P = Provincial Services Tax (PST): The customer is a Canadian customer exempt from the federal GST only. R = Resale: The customer is a reseller and not subject to any sales tax, including VAT. T = Taxes: The customer is subject to all taxes that apply. Although you can create tax records using any of the codes above, retrieving tax status for any tax code but R or E is not currently implemented. Alphanumeric, 1 position; optional.
Resale/exempt #	A number that the state issues to identify a customer who is exempt from taxes on purchases. Alphanumeric, 10 positions; optional.

Screen Option	Procedure
Create customer tax status	Press F6 to advance to the Create Customer Tax Screen.
Change customer tax status	Enter 2 next to a tax record to advance to the Change Customer Tax Screen.
Delete customer tax status	Enter 4 next to a tax record to delete it.

Create Customer Tax Screen

To create: At the Work with Customer Tax Screen, Press F6 to create a tax record for a state or province.

CSR0050 ENTER Create Customer Tax 5/28/97 13:25:11 EZK Mail Order Customer . . . : 498 CARO, JACKIE Country . . . . . State . . . . . . Tax code . . . . (E,G,N,P,R,T) Resale/Exempt # . F3=Exit F12=Cancel

Field	Description
Customer	A unique number assigned to each customer who places an order, and the customer's name or company name. Customer number: numeric, 9 positions; display-only, assigned by the system. Customer last name: alphanumeric, 25 positions; display-only. Customer first name: alphanumeric, 15 positions; display-only. Customer middle initial: alphanumeric, 1 position; display-only. Customer company name: alphanumeric, 30 positions; display-only.
Country	The country where the customer has a special tax status. Country codes are defined in and validated against the Country file; see Setting Up the Country File (WCTY). Alphanumeric, 3 positions, Create screen: required. Change screen: display-only.
State	The state or province where the customer has a special tax status. State codes are defined in and validated against the State file, accessible through the Work with Countries menu option; see Setting Up the Country File (WCTY). Alphanumeric, 2 positions. Create screen: required. Change screen: display-only.
Tax (Tax code)	The tax status of the customer in the state shown. Values are: E = Exempt: The customer is exempt from tax. G = Goods and Services Tax (GST): The customer is a Canadian customer subject to the federal Goods and Services tax only, exempt from the state Provincial Services tax. N = Non-taxable: The customer is exempt from tax. P = Provincial Services Tax (PST): The customer is a Canadian customer subject to the Provincial Services Tax only, exempt from the federal Goods and Services tax. R = Resale: The customer is a reseller and not subject to sales tax. T = Taxes: The customer is subject to all taxes that apply. Although the system does not prevent you from setting up any type of tax record, only reseller (R) or exempt (E) tax records will default in order entry. Retrieving any other type of tax record is not currently implemented. If you enter a tax code of R or E, a Resale/Exempt number is also required. Alphanumeric, 1 position; required.
Resale/exempt #	A number, issued by the state, that identifies the customer as exempt from taxes on purchases. Alphanumeric, 10 positions; required if the Tax code is R or E.

Change Customer Tax Screen

To change: At the Work with Customer Tax Screen, enter 2 next to a tax record to advance to the Change Customer Tax screen. At this screen, you can change the tax code or the resale/exempt number. See Create Customer Tax Screen for field descriptions.