Setting Up Third-Party Tax Solutions

You must perform the following steps to configure PeopleSoft applications to conduct transactions with a third-party tax solution. The third-party tax supplier software should be physically installed and running before carrying out these steps.

To set up PeopleSoft to use a third-party tax solution for tax calculations:

1. Select a tax supplier on the Installation Options - Overall page.

   The selection in the Tax Supplier list box indicates which tax supplier's solution is installed for the PeopleSoft database. This tax supplier validates postal codes on customer address, supplier address, location address, and transaction address pages.

2. Define the tax solution installation options on the Tax Provider Installation page.

3. Select whether to use the tax supplier on the Billing Definition - Business Unit 2 page and the Taxes and Currency page of the PeopleSoft Order Management business unit definition.

   Transactions in these business units have tax calculations performed by the installed tax supplier.

4. (Required for PeopleSoft Purchasing) Select whether to use the tax supplier on the Purchasing Definition - Business Unit Definition page.

Order to Cash-Specific Tax Supplier Setup

Complete these steps for PeopleSoft Billing and PeopleSoft Order Management:

1. Set up tax customer groups.

   You can associate ship to customers with tax customer groups by selecting Tax as the group type. The system passes both the customer ID and tax customer group through the interface to the tax supplier to find exceptions in the tax supplier database based on customer or customer group.

2. Predefine exemption certificates for eligible customers on the General Information - Tax Exempt Certificate Info page, if customer exemption will be maintained in PeopleSoft instead of in the third-party tax supplier's database.

   When you enter sales orders that are exempt from taxes, select the Tax Exempt check box on the Header Ship-To Defaults page, and select from the exemption certificates defined for the customer.

   When entering bill lines that are exempt from taxes, select the Tax Exempt option on the Standard Billing - Line - Tax Info page, and select from the exemption certificates defined for the customer.

   The Tax Exempt option on the sales order or bill line is the only way to override third-party tax supplier tax rules. The third-party tax supplier software logs the transaction as a user exception and does not tax the line.

The following steps are specific to PeopleSoft Order Management:

1. Define tax options for a product on the Product Definition - Options page.

   Associate a tax product number defined on the third-party tax database with the product identifier. The system passes the tax product number to the third-party tax supplier system during tax calculation. You can define special rates or exceptions for the tax product number in the tax supplier system. The third-party tax supplier determines the correct tax rate for the product.

   The transaction type and subtype that you enter are default values that the system passes to the third-party tax supplier system during tax calculation.

2. Associate the product with a tax product group on the Product Group page.

   The system passes the tax product group to the third-party tax supplier system during tax calculation. You can define special rates or exceptions for the tax product group in the tax supplier system. The third-party tax supplier determines the correct tax rate for the product group.

The following step is specific to PeopleSoft Billing:

Define tax defaults for Billing charge codes on the Charge Code page.

Associate a charge code tax group with a Billing charge code. Also define a default transaction type and subtype to be passed to the third-party tax supplier system during tax calculation for a bill line for this charge code.