Sales Tax Set Up Question

[tcalab]

Hi All,

We are on JDE World 9.2. We noticed that invoices aren't calculating tax based on the ship to. Does anyone know where I can review and make sure JDE is using the ship to customers tax explanation code and not the bill to?

Thanks - Terri

 

[Eric Lehti]

Terri,
JDE is behaving as designed and as required by tax law.
Oracle document 626635.1 is a comprehensive discussion of Tax in Sales orders and explains this.

Taxability is determined by the EXR1 value in the Sold-To (Bill-To) because Bill-To is your customer that you invoice. But how much to charge? Easy . . .

The tax rate you charge is determined by the TXA1 value in the SHIP-TO field TXA1 because that is the geographic region of country that your order is shipped to.

IF your customer master records are configured correctly,
The Tax Explanation Code (EXR1) defaults into the Sales header SHEXR1 from the sold-to (Bill To) F0301 record field A5EXR1, and the Tex Rate/Area (TXA1 ) defaults into the Sales header field SHTXA1 from the Ship-to F0301 field A5TXA1.
IF those 2 F0301 records are not as expected, Order Entry program P4210 will attempt to repair the problem by retrieving EXR1 and TXA1 from the other F0301 record.

 

[tcalab]

Eric - that explains it! We just found out that a Mod was put in place from 1997 in the old version we had. Knowing how the system works is VERY helpful!!

 

[tcalab]

Re: Sales Tax Set Up Question *revised*

Eric - One last question/issue I currently have.
Example: I have a customer set up as Billing Type = X we ship and bill product to them and they are marked "E" exempt from tax. They also have several shipping accounts under this bill to which are all over the country. Several of the shipping accounts need to be taxed and have the tax explanation code of "S". With the design of JDE how do I get those ship to's to charge the proper sales tax. Right now JDE brings in the Tax Explanation code of "E" from the Bill to parent?

Thanks!

 

[Eric Lehti]

Re: Sales Tax Set Up Question *revised*

Why do you want to charge sales tax to a tax exempt customer who has provided you a tax exempt certificate? This customer is exempt from paying tax, right?
If you are selling to someone who is taxable, then they are taxable, not exempt. Your description indicates that your customer is sometimes taxable and sometimes tax exempt which does not make sense to me.
Sounds like different customers to me.
However, if you really want to treat your customer simultaneously taxable and tax exempt, do this:

Instead of defining this exempt customer as Exempt in F0301 A5EXR1 field, specify S in this field.
In your Tax table F4008 create a Tax record "NOTAX" with a tax rate of 0.00
In your F0301 customer records in state where you will not charge this customer tax, specify A5TXA1 = NOTAX. In the states where this customer is taxable, specify the appropriate tax code in A5TXA1 for that location.