Calculating Taxes on Transactions
SuiteCommerce InStore (SCIS) calculates tax based on the tax settings you configure in NetSuite. For sales tax to be calculated correctly, you must enable the Advanced Taxes feature in NetSuite, set the tax preferences required for SCIS, and create tax schedules. Set up tax preferences according to SuiteCommerce InStore Installation guidelines. For more information, see Required Features and Settings for SCIS.
Tax Schedules, created in NetSuite, determine how taxes are calculated for items in each nexus. Tax schedules are useful in countries such as the U.S. and Canada where some goods and services are not taxable in certain states and provinces. For more information on setting up Tax Schedules, see Creating Tax Schedules.
The Advanced Taxes feature is required for SuiteCommerce InStore. Tax schedules are required in accounts that use Advanced Taxes. For more information, see Advanced Taxes.
You create nexuses to establish different tax jurisdictions. For general information about setting up tax nexuses, see Nexuses and Subsidiaries.
Tax Codes and Tax Groups
In NetSuite there are important distinctions between tax codes and tax groups. You can create a tax group to combine several tax codes that can be applied to one transaction, even if the taxes are paid to different jurisdictions. The tax group rate is the sum of these separate tax codes.
For example, if you have two retail locations in Illinois, you may have the following tax groups configured in NetSuite:
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Tax Group IL_ASES – The tax rate is 7%, which is the sum of the two tax codes included in the group.
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Includes two tax codes: IL_IL state tax of 6.25%, and IL_ASES at 0.75%.
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Applicable to certain postal codes, such as 60002.
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Tax Group IL_ALGONQUIN_ARXL – The tax rate is 7.75%, which is the sum of three tax codes included in the group.
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Includes three tax codes: IL_IL at a rate of 6.25% (State), IL_ALGONQUIN at 0.75% (City), and IL_ARXL at 0.75% (Transit).
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Applies only to postal code 60102.
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The setting in NetSuite, Enable Tax Lookup on Sales Transactions, determines the appropriate tax group or tax code for a customer based on the postal code in the customer's shipping address.
Sales Tax for Customers
Based on the example above, if a product is sold to the "Default Customer" with the postal code 60102 (ALGONQUIN), NetSuite sets the tax rate to 7.75%. Alternatively, if no tax group exists, tax calculation for the order depends on the tax item set on the Default Customer record. To charge tax on the order, note that the customer record must be marked as taxable, and a tax nexus must be configured. Both of these are tax preference settings included in the installation guidelines.
The default customer record is marked as taxable by default. Also, note that part of configuration is setting the default tax item for new customers.
Cash and Carry
When selecting a customer on an SCIS transaction, the sales tax is calculated based on the tax code or tax item set on the customer record. If there is no tax code or tax item on the customer record, then the tax is calculated based on the SCIS location address. Note that Customers Default to Taxable is a tax preference setting included in the installation guidelines.
Delivery Orders
For products that are ordered through SCIS (the product is shipped to the customer), tax is calculated based on the tax code or tax item set on the customer record. An Administrator configures tax settings for new customers as part of installation.