About Calculating Taxes

BRM uses tax codes to calculate the taxes for charges and discounts. Tax codes define the tax percentage to apply to a charge, the jurisdiction (state or local), and how to calculate the tax amount. When you create product offerings, you can specify the tax code to apply to charges, discounts, and chargeshares. For example, you can use one tax code for telephone handsets and another for online service subscriptions.

When configuring charges, you can also specify when to calculate the taxes. You can calculate taxes at these times:

During rating: In this configuration, taxes are calculated when the event is rated and added to the customer's account balance. This way, you always have an accurate reading of a customer's account balance at any time in the accounting cycle.
During billing: In this configuration, taxes are calculated at billing time. Deferring tax calculation to the billing process reduces rounding errors because all events of the same type are taxed together. For example, BRM calculates taxes for the total usage fees rather than individual usage events.
During billing, but using the event time: In this configuration, taxes are calculated at billing time using the tax rate at the time the event occurred. This method provides the benefits of billing-time taxation while allowing you to change tax rates during a billing cycle. For example, assume a recurring charge's tax rate changes from 2% to 3% on May 15. If a billing cycle ends on May 30, BRM will use the 2% rate to calculate the charge's April 30 through May 14 taxes and the 3% rate to calculate the charge's May 15 through May 29 taxes.

BRM can use the following methods to calculate taxes:

Use tax codes alone to apply simple flat taxes.
Use a tax selector to apply tax codes based on attributes in the /account, /service, /event, or /profile objects.
Use Vertex tax calculation software to apply complex taxation for multiple jurisdictions. With this method, you run the Vertex Data Manager to communicate with the Vertex tax database.

When you use Vertex to calculate taxes, you configure tax suppliers. A tax supplier is a company or corporate division responsible for collecting taxes for a transaction. Tax suppliers typically include your corporate headquarters and branch offices.

For more information about creating tax codes and tax selectors, see "Creating Tax Codes".

You can also use tax calculation opcodes to create a custom tax calculation application. See "Using Custom Tax Rates" in BRM Opcode Guide.

Impacts of Tax Calculation

Tax calculation affects how other BRM features work:

You can specify whether to perform an adjustment, dispute, or settlement with or without taxes, provided the original item or event was taxable. Taxed adjustments, disputes, and settlements effectively reverse whatever tax was levied on the original item. See "Accounts Receivable" in Billing Care Online Help.
You can record taxes as general ledger data. To do so, create a general ledger ID (G/L ID) for each tax code. See "Setting Up Your General Ledger" in BRM Collecting General Ledger Data.
When rerating taxed events, BRM calculates taxes on any deferred taxable amount in the rerated events during the subsequent bill run. The rerated tax appears on the invoice for the next bill run. You can configure BRM to apply deferred taxes during rerating. This enables BRM to include the deferred tax amounts on corrected invoices.
You can define tax exemptions for customers in Billing Care or Customer Center. For example, you can specify if an account is exempt from city taxes. You can also specify the exemption percentage, such as 10% of the amount is not taxed or 100% for a total exemption.

Vertex Communications Tax Q Series does not support partial tax exemptions in percentage. It supports only total exemption (100%) or no exemption (0%). If you set up an account to have a partial tax exemption, BRM sends the transaction for this account to the tax package as 100% tax-exempt.

About Tax Exemptions

Tax exemptions reduce or eliminate the amount of tax your customers owe.

You can apply tax exemptions for event-time and billing-time calculations by:

Adding a tax exemption to an existing account.
Using a tax exemption selector to apply tax exemption codes to products based on account, service, event, or profile attributes.

If you define a tax exemption at both the account and product level for the same jurisdiction (for example, federal), BRM uses the account-level exemption.

If you define a tax exemption at the account and product levels for different jurisdictions, BRM applies both exemptions. For example, if the account has an exemption at the federal level, and the product has an exemption at the state level, both are applied.