The following picture illustrates how a rate factor and its characteristics are used to retrieve the relevant city tax at billing time:
The following points describe the above:
At billing time, the billing engine sends a request to a rate to calculate the appropriate city tax based on the known real property tax calculated for the county.
The rate calculates charges without rate factors until it encounters the rate component used to levy city tax. This rate component references a rate factor. This means the rate must get the tax rate(s) in effect during the billing period from this rate factor.
The city tax rate factor contains an attribute defining that the location's taxing city characteristic controls the rate factor value. The rate factor therefore extracts the taxing city from the location.
Deriving characteristic values. Rather than have the system extract the characteristic value from an entity, you can setup the system to derive the characteristic value when the rate is calculated. For example, if all of your taxpayers are located in a single city, you may not want to maintain the taxing city on every location. To do this, you could setup the rate to "hard code" a taxing city of say Sterling. This is an advanced topic, but it may prove useful for your implementation. Refer to Deriving / Passing In Characteristic Values for the details.
The location returns the taxing city and the rate factor extracts the tax rate(s) in effect during the bill period and returns them to the rate.
The rate applies the tax percents and returns the charges to billing.
Some rate factors don't need a characteristic. There are rate factors whose value does not differ based on a characteristic. For example, a rate factor that does not need a characteristic is a fee assessed for returned checks. These are typically flat fees that do not vary when applied. However, because of the relational design of the system, every rate factor value must reference both a rate factor and a characteristic value. Therefore, if you have rate factors whose value is not related to a characteristic, you must specify a characteristic type on the rate factor with a characteristic value that is exactly the same as the characteristic type.
For more information about setting up characteristics, see Setting Up Characteristic Types & Their Values.
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