Apply Tax According to Customer

Calculate tax according to the customer you select in the Customer attribute on the sales order.

Summary of the Set Up

1. Modify the customer set up.

2. Verify the party tax profiles.

3. Set up another customer.

4. Specify the default taxes.

5. Test your set up.

For this example, assume.

• You are in the Vision Operations business unit.

• Your sales order must calculate tax according to the Computer Service and Rentals customer.

Assume you already set up tax so Order Management applies it according to the customer site.

• You set up tax for site 1036 of your Computer Service and Rentals customer.

• The tax jurisdiction in Tempe charges a 5% tax.

• Tax is STATE1 at the state level for Arizona.

• Tax jurisdiction is for the state of Arizona.

• Tax rate is 5%.

For details, see Apply Tax According to Customer Site. You will reuse some of the objects that you already set up in that topic, such as the tax rate.

Modify the Customer Set Up

1. Go to the Setup and Maintenance work area, then go to the task.

   • Offering: Financials

   • Functional Area: Customers

   • Task: Manage Customers

2. On the Manage Customers page, search for the value.

   Attribute	Value
   Organization Name	Computer Service and Rentals

3. In the search results, in the Organization Name column, click Computer Service and Rentals.

4. On the Edit Customer page, click Tax Profile, set the value, then click Save and Close.

   Attribute	Value
   Tax Classification Code	6% TAX RATE Use upper case. The value is case sensitive.

5. On the Manage Customers page, in the Sites area, in the Site Number column, click 1036.

6. On the Edit Site page, click Tax Profile, set the value, then click Save and Close > Done.

Verify the Party Tax Profiles

Verify that the tax classification code in the party tax profiles default to the value you set on the Manage Customers page.

1. On the setup page, go to the task.

   • Offering: Financials

   • Functional Area: Transaction Tax

   • Task: Manage Party Tax Profiles

2. On the Manage Party Tax Profiles page, set Search For to Third-Party Tax Profiles, then search for the value.

   Attribute	Value
   Party Name	Computer Service and Rentals

3. In the search results, click the value in the Party Number column.

4. On the Third-Party Tax Profile page, verify the value, then click Done.

   Attribute	Value
   Tax Classification Code	6% TAX RATE

5. On the Manage Party Tax Profiles page, set Search For to Third-Party Site Tax Profiles, then search for the value.

   Attribute	Value
   Party Name	Computer Service and Rentals

6. On the Third-Party Site Tax Profile page, in the search results, in the Party Site Number column, click 1036.

   Assume 1036 is the site for the Arizona location.

7. On the Third-Party Site Tax Profile page, verify the value, then click Done > Done.

   Attribute	Value
   Tax Classification Code	6% TAX RATE

Set Up Another Customer

Let's say you have another customer named Computer Associates. Repeat the set ups you just made above but this time do the set up for Computer Associates, and set the tax rate to 5%.

Specify the Default Taxes

Specify the sequence to use when determining the default tax to apply. This helps to make sure Order Management applies a tax even if there's a problem with applying tax according to customer.

1. On the Setup page, click Search, search for, then open the Manage Application Tax Options task.

2. On the Manage Application Tax Options page, search for the values.

   Attribute	Value
   Business Unit	Vision Operations
   Application Name	Receivables

3. In the search results, set the values, then click Save and Close.

   Attribute	Value
   Enable Defaulting Order	Contains a check mark.
   Defaulting Order 1	Customer
   Defaulting Order 2	Customer Site
   Defaulting Order 3	Product

Here's the logic that this set up implements.

1. Use the set up you just made to apply tax according to the customer you select on the sales order.

2. If the tax set up according to customer isn't available, then apply tax according to the customer site.

3. If the tax set up for the customer site isn't available, then apply tax according to the item you add to the order line. Use the set up in the Product Information Management work area to apply the tax.

Test Your Set Up

1. Go to the Order Management work area and create a sales order.

   Attribute	Value
   Customer	Computer Service and Rentals
   Business Unit	Vision Operations

2. Add an order line.

   Attribute	Value
   Item	AS54888
   Quantity	1
   Amount	2,500

3. Click Actions > Reprice Order.

4. Click the total at the top of the sales order, then verify that the tax rate is 6%, which is the rate you set for your Computer Service and Rentals customer.

   Attribute	Value
   Total List Price	2,500.00
   Discount	0.00
   Total Net Price	2,500.00
   Shipping	0.00
   Total Tax	150.00 150 is 6% of 2,500, so this rate is correct.
   Total Credit	0.00
   Pay Now	2,650.00

5. Create another sales order.

   Attribute	Value
   Customer	Computer Associates
   Business Unit	Vision Operations

6. Add an order line.

   Attribute	Value
   Item	AS54888
   Quantity	1
   Amount	2,500

7. Click Actions > Reprice Order.

8. Click the total at the top of the sales order, then verify that the tax rate is 5%, which is the rate you set for your Computer Associates customer.

   Attribute	Value
   Total List Price	2,500.00
   Discount	0.00
   Total Net Price	2,500.00
   Shipping	0.00
   Total Tax	125.00 125 is 5% of 2,500, so this rate is correct.
   Total Credit	0.00
   Pay Now	2,625.00