SUT Processing on the Purchase Order

PeopleSoft Purchasing supports two different methods for assigning tax rates and amounts on to purchase orders. If you use a third-party tax calculation package, such as Vertex or Taxware, SUT can be assigned to a purchase order schedule by calling the third-party application to perform the tax calculation. In addition, PeopleSoft also provides internal tables to maintain tax rates for instances where a third-party tax provider is not installed. In this case, the internal tax rate tables are used to store tax codes and calculate estimated tax amounts.

SUT rates are usually dependent on the location where the goods are to be used or shipped. For this reason, purchase order SUT amounts are calculated at the schedule level. Two factors that contribute to the calculation are the tax destination and applicability. If you are using PeopleSoft's tax tables, the tax destination and applicability, in addition to other optional factors, such as ultimate use code or category, determine the appropriate tax code, which consists of tax rates. If you use a third-party tax application, the tax destination, applicability, and tax product cross-reference fields (such as ultimate use code) are passed to the application to return tax rates and tax amounts for the schedule.

The tax destination appears by default from the ship to location to the purchase order schedule, where you can override it. The tax destination on the purchase order must be a valid ship to location. Each ship to location definition can include tax exception information, such as whether the location is exempt, direct pay, or active for tax processing.

Use this tax destination to derive the tax applicability. You can establish the tax options for each supplier location on the Tax Options page accessed from the Supplier - Location page. You can set the supplier tax applicability to none, sales, or use. You can also define tax applicability information on the ShipTo Supplier Order Location page. The values that you enter here override the values that you defined for the supplier location. This tax applicability appears by default on the purchase order schedule, where you can modify it.

Once you determine the tax destination and applicability, you can determine the tax rates and amounts for each schedule. If you are using PeopleSoft SUT tables, you will retrieve the tax code and calculate the tax rate. Establish the tax code for each ship to location on the ShipTo Sales/Use Tax Default page. These tax codes search for the entry that most closely matches the schedule line. If you use a third-party application to calculate tax rates and amounts, the tax code field is not required or used as the default on to the schedule. PeopleSoft calls the third-party tax provider to return both the rates and the amounts for the appropriate taxing jurisdictions for each schedule.

For example, let's say that you defined a ship to location of ABC01 with ABC tax codes. Sales tax is applicable for all of the suppliers. When you have an order with a ship to location of ABC01, the system automatically calculates the ABC tax for the order. Using this functionality, you have to set up tax codes for suppliers only on an exception basis.

You can define tax codes and tax authorities on the Tax Code page and Tax Authority page.