Establishing PeopleSoft-Only Sales and Use Tax Processing
This section provides an overview of PeopleSoft-only sales and use tax processing, and discusses how to set up PeopleSoft-only sales and use tax processing options.
This section discusses:
Default logic for tax applicability and codes.
Sales and use tax calculations.
Calculation examples.
Tax applicability and tax codes are derived by ship to location, item, ultimate use code, and supplier. The value of the Tax Destination field is used to look up default values. The default values for tax applicability and tax codes are defined with ship to locations on the Ship To Locations page.
Default Logic for Tax Applicability and Codes
The following table describes the logic that the system uses to populate the tax applicability and tax codes onto the voucher line. You can override these default values at any time, and the system recalculates the values based on your new choices rather than the original defaults.
This defaulting logic is the only mechanism for defaulting tax applicability and tax codes.
When the system finds a match, it uses the matching row and exits the routine. If no match is found, the routine continues to the next step.
Condition |
Logic |
---|---|
If voucher line has an item, ultimate use code, and category: |
|
If voucher line has an item and ultimate use code: |
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If voucher line has a category and ultimate use code: |
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If voucher line has an item and category: |
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If voucher line has an item: |
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If voucher line has a category: |
|
If voucher line has an ultimate use code: |
|
Action: |
|
If voucher line has an item, ultimate use code, and category: |
Looks for match in default table with no supplier and supplier location. |
If voucher line has an item and ultimate use code: |
Looks for match in default table with no supplier and supplier location. |
If voucher line has a category and ultimate use code: |
Looks for match in default table with no supplier and supplier location. |
If voucher line has an item and category: |
Looks for match in default table with no supplier and supplier location. |
If voucher line has an item: |
Looks for match in default table with no supplier and supplier location. |
If voucher line has a category: |
Looks for match in default table with no supplier and supplier location. |
If voucher line has an ultimate use code: |
Looks for match in default table with no supplier and supplier location. |
Action: |
|
Sales and Use Tax Calculations
The system calculates sales and use tax by applying the tax rate for the tax code on each voucher line against the taxable basis amount. After the system calculates all of the voucher lines, it compares the calculated sales tax amount against the amount of sales tax input on the Voucher Invoice Information page. When there is a difference between calculated sales tax and input sales tax, the system prorates the sales tax amount on the voucher across voucher lines that are sales tax applicable.
When the calculated sales tax amount is zero, the system prorates sales tax on the voucher by the percentage of each voucher line's basis amount, divided by the total sales tax basis amount of all voucher lines that have been designated as sales tax applicable. If a sales tax amount is calculated using the applicable tax rate, the sales tax input on the voucher is prorated by the percentage of the calculated sales tax for that line, divided by the total calculated sales tax amount for the voucher.
The system accrues the difference between calculated sales tax and the voucher sales tax amount as use tax if the Sales and Use Tax Edit Message field on the Payables Definition - Tax Options page is set to Warning and the sales tax tolerance levels are exceeded. The system processes accrued use tax entries in the same way as calculated use tax charges. No amount is accrued if the sales tax tolerance levels are not exceeded.
Calculation Examples
This section discusses:
Example 1
Example 2
The following examples are based upon certain assumptions.
Tax codes and rates include:
Tax Code |
Tax Rate |
---|---|
Sales1 |
2% |
Sales2 |
4% |
Sales3 |
6% |
Sales4 |
8% |
Use1 |
1% |
Ship to A:
Appl |
Sales Tax Code |
Use Tax Code |
Ultimate Use Code |
Category |
Item |
Supplier |
Location |
---|---|---|---|---|---|---|---|
Taxable |
Sales1 |
Use1 |
|
|
|
|
|
Direct Pay |
Sales2 |
Sales2 |
MFG |
|
|
|
|
Exempt |
|
|
RSCH |
|
ItemA |
|
|
Taxable |
Sales3 |
Sales3 |
|
|
|
SupplierA |
Main |
Exempt |
|
|
RSL |
|
|
|
|
Taxable |
Sales4 |
Sales4 |
|
|
ItemA |
SupplierA |
Main |
Ship to B:
Appl |
Sales Tax Code |
Use Tax Code |
Ultimate Use Code |
Category |
Item |
Supplier |
Location |
---|---|---|---|---|---|---|---|
Exonerated |
|
|
|
|
|
|
|
Example 1
This example is based upon the following assumptions:
Accrue difference is not applicable.
Tolerance checking is not performed.
Vchr ID |
Total |
Entered Tax |
Supplier |
Loc |
Ship To |
Item |
Use Code |
Tax Code |
Calc Sales Tax |
Calc Use Tax |
---|---|---|---|---|---|---|---|---|---|---|
A |
1000 |
10 |
SupplierB |
Main |
A |
|
|
Sales1 |
20.00 |
0.00 |
B |
1000 |
|
SupplierB |
Main |
A |
|
MFG |
Sales2 |
0.00 |
40.00* |
C |
1000 |
|
SupplierB |
|
A |
ItemA |
RSCH |
|
0.00 |
0.00 |
D |
1000 |
10 |
SupplierA |
Main |
A |
|
|
Sales3 |
60.00 |
0.00 |
E |
1000 |
|
SupplierB |
|
A |
|
RSL |
|
0.00 |
0.00 |
F |
1000 |
10 |
SupplierA |
|
A |
ItemA |
|
Sales4 |
80.00 |
0.00 |
G |
1000 |
|
SupplierB |
|
B |
|
|
|
0.00 |
0.00** |
* The direct pay certificate is copied onto the voucher. The sales tax rate is used and the use tax is calculated.
** The exoneration certificate is copied onto the voucher. No tax is calculated.
Note: It is your organization's responsibility to provide the appropriate certificates when claiming an exemption. The system only displays a warning message if this field is left blank in the shipping information group box.
Example 2
This example is based upon the following assumptions:
Accrue difference is selected.
Tolerance checking is not performed or set to warning.
If tolerance checking is not performed, the system accrues use tax charges whenever the sales tax calculated on the voucher is greater than the sales tax amount input by the user. If tolerance checking is set to warning and the sales tax tolerance levels are exceeded, the system accrues the difference as use tax charges.
Vchr ID |
Total |
Ent Tax |
Supplier |
Loc |
Ship To |
Item |
Use Code |
Tax Code |
Calc Sales Tax |
Calc Use Tax |
---|---|---|---|---|---|---|---|---|---|---|
A |
1000 |
10 |
SupplierB |
Main |
A |
N/A |
N/A |
Sales1 |
20.00 |
10.00 |
B |
1000 |
N/A |
SupplierB |
Main |
A |
N/A |
MFG |
Sales2 |
0.00 |
40.00* |
C |
1000 |
N/A |
SupplierB |
|
A |
ItemA |
RSCH |
|
0.00 |
0.00 |
D |
1000 |
10 |
SupplierA |
Main |
A |
N/A |
N/A |
Sales3 |
60.00 |
50.00 |
E |
1000 |
|
SupplierB |
N/A |
A |
N/A |
RSL |
N/A |
0.00 |
0.00 |
F |
1000 |
10 |
SupplierA |
N/A |
A |
ItemA |
N/A |
Sales4 |
80.00 |
70.00 |
G |
1000 |
N/A |
SupplierB |
N/A |
B |
N/A |
N/A |
N/A |
0.00 |
0.00** |
* The direct pay certificate is copied onto the voucher. The sales tax rate is used and the use tax is calculated.
** The exoneration certificate is copied onto the voucher. No tax is calculated.
Note: You must accept the calculated tax amount if tolerance checking is set to error.
In PeopleSoft Payables, sales and use tax data elements are defaulted from the control tables to minimize repetitive data entry. After the setup, you only enter exceptions to the default rules that you have defined. Sales and use tax default rules follow the PeopleSoft Payables control hierarchy. Values at the business unit level default to the transaction level unless you override the defaults with values stored at an intermediate level, such as voucher origin, control group, or supplier. Sales and use tax defaults and calculations depend on how you set up the following data elements in the table below:
Task |
PeopleSoft Page |
Comments |
Hierarchy Level |
---|---|---|---|
1. Define tax authority codes. |
Tax Authorities page |
N/A |
|
2. Define sales and use tax codes. |
Tax Codes page |
N/A |
|
3. Define Ultimate Use codes (optional). |
Ultimate Use Codes page |
N/A |
|
4. Define sales and use tax defaults for ship to locations. |
Ship To Locations page Click the Sales/Use Tax link to access the Sales and Use Tax Defaults page. |
See Sales/Use Tax Page. |
N/A |
5. Define sales and use tax options for the business unit. |
Payables Definition - Tax Options page |
Business unit |
|
6. Specify sales tax tolerances for the business unit. |
Payables Options - Tax Options page |
Business unit |
|
7. Specify sales and use tax parameters for voucher origins. |
Voucher Origin − Tax Options page |
Voucher origin |
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8. Specify sales and use tax parameters for control groups. |
Group Information − Tax Options page |
Control group |
|
9. Define sales and use tax defaults for suppliers. |
Supplier Information - Location page Click the Procurement link to define Ordering and Ship From location addresses. Click the Sales/Use Tax link to define sales and use tax options. |
Supplier |
|
10. Specify sales and use tax options for vouchers. |
Invoice Information page Click the Sales/Use Tax link to access the Invoice Line Tax Information page. |
Voucher |