About Calculating Taxes

BRM uses tax codes to calculate the taxes for charges and discounts. For flat taxes, a tax code defines how to apply a fixed rate. For Vertex O Series, BRM maps the tax code to a Vertex O Series product or taxability driver, and Vertex returns the applicable taxes and rates by jurisdiction. 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 specify when BRM calculates taxes. Taxes can be calculated at the following times:

During rating: BRM calculates taxes when the event is rated and adds them to the customer’s account balance. This approach maintains an accurate account balance throughout the accounting cycle.
During billing: BRM calculates taxes during billing. Deferring tax calculation to billing can reduce rounding errors because events of the same type are taxed together. For example, BRM taxes the total usage fees rather than individual usage events.
During billing, but using the event time: BRM calculates taxes during billing, using the tax rate in effect when the event occurred. This method provides the benefits of billing-time taxation while allowing tax rate changes during a billing cycle. For example, if a recurring charge’s tax rate changes from 2% to 3% on May 15 and the billing cycle ends on May 30, BRM uses the 2% rate to calculate taxes for April 30 through May 14 and the 3% rate for May 15 through May 29.

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 across multiple jurisdictions.
- Vertex Communications Tax Q Series: Use the Vertex Data Manager to communicate with the Vertex tax database.
- Vertex O Series: Use the Taxation Gateway, which integrates with Vertex O Series using REST APIs.
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 reverse the tax levied on the original item. See "Accounts Receivable" in Billing Care Online Help.
You can record taxes as general ledger data. 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 amounts in the subsequent bill run. The rerated tax appears on the next invoice. You can configure BRM to apply deferred taxes during rerating so that corrected invoices include the deferred tax amounts.
You can define tax exemptions for customers in Billing Care or Customer Center. For example, you can specify that an account is exempt from city taxes. You can also specify an exemption percentage (for example, 10% not taxed) or a full exemption (100%).

Vertex Communications Tax Q Series and Vertex O Series do not support partial tax exemptions in percentage. They 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 tax owed by customers.

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 exemption codes to products based on account, service, event, or profile attributes.

If you define exemptions at both the account and product levels for the same jurisdiction (for example, federal), BRM applies the account-level exemption.

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

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