Calculating Taxes for Accounts Receivable Actions

About Taxation for Adjustments, Disputes, and Settlements

You can configure how BRM calculates taxes for adjustments, disputes, and settlements, including whether tax reversals occur when account adjustments are created or at billing time.

You can perform adjustments, disputes, or settlements with or without taxes at the account, bill, item, and event levels. For taxable account, bill, and item adjustments, BRM uses the tax configuration (for example, /config/ar_taxes) to calculate the tax reversal.

If you include taxes in an A/R action:

If billing has already occurred: BRM always calculates taxes when you create the adjustment, dispute, or settlement.
If billing has not occurred: BRM applies the tax amount only if the item has real-time taxes. If the item has deferred taxes, BRM calculates and applies the tax amount at billing time.

To ensure tax calculations are performed correctly for adjustments, disputes, settlements, and write-offs:

Configure a separate, tax-only item. See "Cumulative Custom Item for Taxes" in BRM Configuring and Running Billing.
Ensure all events associated with an item use the same tax method (tax now or tax deferred). Nontaxable events are valid in either scenario.

About Adjustment Tax and Billing Cycles

For account, subscription service, or member service–level adjustments, BRM uses the total adjustment amount without considering the specific events included.

For bill-, item-, and event-level adjustments, BRM distinguishes between items and events that need real-time taxes and those that need deferred taxes. If some adjusted items or events are nontaxable, BRM omits them from the deferred amount transferred for taxation during billing. For partial adjustments, BRM proportions the deferred amount according to the granted portion of the adjustment.

About Dispute and Settlement Taxes

For bill- and item-level disputes and settlements, BRM applies real-time taxes when you create the dispute or settlement. When processing disputes and settlements with deferred taxes, BRM determines whether the original item has been billed.

If billing has not occurred: BRM has not levied tax for the original item. No separate tax application is needed because the dispute or settlement adjusts the balance before BRM calculates taxes.
If billing has occurred: BRM has already charged tax on the original item. BRM defers applying the tax reversal amount until the next billing run.

For partial disputes and settlements, BRM proportions the deferred amount by the relative size of the dispute or settlement.

Configuring Tax Calculation for Adjustments, Disputes, and Settlements

Depending on tax law, jurisdiction, and other factors, you may need to specify whether to apply a tax reversal when performing adjustments, disputes, and settlements. For example, the law may require that you reverse taxes for any adjustment you apply to a charge for a call placed outside the country but not require you to reverse taxes for adjustments to prepaid balances.

As a prerequisite, load the /config/ar_taxes object, which defines tax treatment parameters for each event type. BRM uses this object to enrich the adjustment, dispute, and settlement opcode flists with the tax information needed to calculate the tax reversal.

After loading the pin_config_ar_taxes.xml file, you have the following options:

If you use Customer Center for accounts receivable operations, configure a default tax treatment for adjustments, disputes, and settlements. Customer Center then determines whether these activities always have a tax reversal, never have a tax reversal, or allow a CSR to decide. See "Configuring the Default Tax Treatment for Customer Center".
If you do not use Customer Center for adjustments, edit the CM pin.conf file to configure BRM to apply tax reversals at adjustment time instead of deferring until billing. See "Configuring the Default Tax Method for Account Adjustments".

If you use Customer Center, BRM ignores the tax reversal entry in pin.conf. Use the Customer Center Configurator to set the tax treatment.

Before loading the tax configuration, load the tax suppliers. See "About Tax Suppliers".

The pin_config_ar_taxes.xml file specifies the tax supplier and tax code for each adjustment, dispute, and settlement event type.

The tax suppliers specified in pin_config_ar_taxes.xml must be listed in tax_supplier_map.
The tax code used in pin_config_ar_taxes.xml must be present in taxcodes_map and mapped to a package that calculates tax for the specific charge offer type. The tax code can be numeric or a descriptive string.

For information on tax suppliers, tax codes, and the associated map files, see "Creating Tax Suppliers".

The pin_config_ar_taxes.xml file must follow standard XML formatting rules. The following example shows a typical pin_config_ar_taxes.xml file.

Note:

The <Name> element identifies the tax supplier.

<?xml version="1.0" encoding="UTF-8" ?> 
  <AccountReceivablesConfiguration>
    <TaxConfigurationList>
      <TaxConfiguration>
        <Event>/event/billing/adjustment/item</Event>
        <Name>ABC Inc - California branch</Name>
        <TaxCode>usage</TaxCode>
      </TaxConfiguration>
      <TaxConfiguration>
        <Event>/event/billing/dispute/item</Event>
        <Name>ABC Inc - California branch</Name>
        <TaxCode>usage</TaxCode>
      </TaxConfiguration>
      <TaxConfiguration>
        <Event>/event/billing/settlement/item</Event>
        <Name>ABC Inc - New Jersey branch</Name>
        <TaxCode>usage</TaxCode>
      </TaxConfiguration>
      <TaxConfiguration>
        <Event>/event/billing/adjustment/account</Event>
        <Name>ABC Inc - Illinois branch</Name>
        <TaxCode>cycle</TaxCode>
      </TaxConfiguration>
    </TaxConfigurationList>
  </AccountReceivablesConfiguration>

To load the tax configuration:

Edit the sample pin_config_ar_taxes.xml file in the BRM_home/sys/data/config directory.

You can rename the file and save it to a different directory.
Save the pin_config_ar_taxes.xml file.
Use the following command to run the load_pin_ar_taxes utility:
```
load_pin_ar_taxes -f input_file.xml
```
where input_file.xml is the name and path to the XML file.
Stop and restart the Connection Manager (CM) and, if necessary, your client application.

To verify that the pin_config_ar_taxes.xml file was loaded, you can display the /config/ar_taxes object by using the Object Browser, or use the robj command with the testnap utility. See "Reading an Object and Writing Its Contents to a File" in BRM Developer's Guide.

Configuring the Default Tax Treatment for Customer Center

If you use Customer Center as your CRM application, you can configure a default tax treatment for adjustments, disputes, and settlements. Customer Center then determines whether these activities always include a tax reversal, never include a tax reversal, or allow a CSR to decide. A default tax treatment helps enforce uniform tax handling for a given location and reduces CSR decision-making.

Configure the tax treatment on the Balance tab in Customer Center Configurator. This setting overrides any tax treatment specified in the pin.conf file. To set up tax treatment for adjustments, disputes, and settlements, select one of the following under Tax treatment on the Configurator Balance tab:

Include tax: Always perform a tax reversal for the adjustment, dispute, or settlement.
Exclude tax: Never perform a tax reversal for the adjustment, dispute, or settlement.
None: Allow the CSR to choose whether to include taxes.

For information on using the Customer Center Configurator Balance tab and the implications of these three options, see "Balance Configurator" in BRM Developer's Guide.

Configuring the Default Tax Method for Account Adjustments

You can configure BRM to calculate the tax for account adjustments using one of these methods:

Billing-time taxation: BRM defers tax calculation for all account adjustments until the end of the billing cycle. This is the default.
Adjustment-time taxation: BRM calculates taxes when you create an account adjustment.
Dynamic taxation: BRM defers tax calculation until the end of the billing cycle but uses the tax rate in effect at the time of the account adjustment (for example, an adjustment on June 15 with a June 30 bill date uses the June 15 rate). Dynamic taxation provides the benefits of billing-time taxation while allowing you to change tax rates during a billing cycle.

To configure the default tax method for account adjustments:

Open the Connection Manager configuration file (BRM_home/sys/cm/pin.conf).
Modify the tax_now parameter:
```
-fm_ar tax_now value
```
where value is set to one of the following:
- 0: Billing-time taxation. This is the default value.
- 1: Adjustment-time taxation.
- 2: Dynamic taxation.
- 3: Itemized taxation.
Note:

Ensure all events associated with an item use the same tax method to ensure correct tax calculations.
Save and close the file.

You do not need to restart the CM to enable this entry.

Configuring Itemized Taxation for A/R and Payments

You can save tax information for A/R and payments at the item level. This allows you to view the following details for each adjustment and payment:

Settled tax amount
Settled taxed amount
Settled non-taxed amount

You can configure BRM to calculate itemized taxes for adjustments and payments by setting the ItemizedTaxCalculation business parameter to enabled using the pin_bus_params. See "pin_bus_params" in BRM Developer's Guide for more information about this utility.

You can view details about the taxes applied or reversed during A/R and payments at the following level:

Itemize: BRM segregates tax details based on the tax code and tax jurisdiction.
Summarize: BRM segregates tax details based only on the tax code.

To configure whether BRM uses itemized taxation:

Go to BRM_home/sys/data/config.
Create an XML file from the /config/business_params object:
```
pin_bus_params -r BusParamsBilling bus_params_billing.xml
```
This command creates an XML file named bus_params_billing.xml.out in your working directory.
Open the bus_params_billing.xml.out file.
Set the ItemizedTaxCalculation parameter:
```
<ItemizedTaxCalculation>value</ItemizedTaxCalculation>
```
where value is:
- enabled to have BRM store tax information at the item level.
- disabled (default) to have BRM not use itemized taxation.
Save and rename this file as bus_params_billing.xml.
Load the XML file into the BRM database:
```
pin_bus_params  bus_params_billing.xml
```
Open the bus_params_rating.xml.out file.
In the file, set the TaxReturnJuris parameter:
```
<TaxReturnJuris>value</TaxReturnJuris>
```
where value is:
- itemize to have BRM report settled_tax and settled_taxed_amount based on tax code and jurisdiction level.
- summarize to have BRM report the consolidated amount of the settled_tax_amount, settled_taxed_amount, and settled_non_taxed_amount for each item.
Save this file as bus_params_rating.xml.
Load the XML file into the BRM database:
```
pin_bus_params bus_params_rating.xml
```
Stop and restart the CM.

Note:

AR actions are not supported for scenarios having both event time and billing time taxation in the same item.

Retrieving Itemized Tax Details

You can retrieve the itemized tax details for a customer’s A/R action using one of the following:

Billing Care. See "Accounts Receivable" in Billing Care Online Help.
A custom client application calling the PCM_OP_AR_GET_ITEM_DETAIL opcode. See "Retrieving Details about a Specific A/R Item or Bill Item" in the BRM Opcode Guide.
A custom client application calling the following operations in the Billing Care REST API:
- For disputes and settlements: Get Settlement Details for a Dispute
- For adjustments: Get Details About an Adjustment
- For payments: Get Details for a Payment
For more information, see REST API Reference for Billing Care.

2 Calculating Taxes for Accounts Receivable Actions