Understanding Tax Information for Items

To apply a tax to the sales or purchase of an item, you perform two tasks to specify that the item is taxable:

• Set the Sales Taxable and Purchasing Taxable fields for the item on the Item Branch/Plant Info form to yes. For non-stock items, set these fields on the line type definition.

• Assign the item to a tax category code.

In Vertex Sales Tax Q Series, the tax category corresponds to product categories that you define in Tax Decision Maker (TDM) for any special tax exceptions or overrides. For example, when you sell a stock item, the JD Edwards EnterpriseOne Sales Order Management system passes the tax category code to Vertex Sales Tax Q Series.

Before Vertex Sales Tax Q Series calculates the tax, it compares the tax category code with TDM product categories. If it finds a TDM setting for the category as taxable, exempt, or otherwise, TDM dictates how Vertex Sales Tax Q Series specifies a tax. If it does not find a TDM setting for the category, Vertex Sales Tax Q Series taxes the item at the standard rate for that jurisdiction.

Taxes are calculated for items only if the customer or supplier master record is specified as taxable. If no tax information exists on the customer or supplier master record, no record is written to the Vertex Sales Tax Q Series register.