In this article
Expense/Capitalize jurisdictions and the POS Tax Amount total
Tax groups
Tax Groups are groups of inventory items that are subject to the same tax, or in other words, eligible for tax to be calculated if the customer is tax liable. For example, you can set up a tax group for taxable items and another group for non-taxable items. You must assign tax group codes to inventory items and general ledger accounts. Similarly, you must assign tax area codes to customers, locations, and to your own company settings.
- To set up this component, click the
icon, enter Tax Groups, and select the relevant link. - Click the New action to set up your list of Tax Group codes.
- Specify the Tax Group on the relevant Sales Tax Groups .
Tax jurisdictions
If you set up new tax areas and tax jurisdictions, you must make sure that you fill in the fields correctly. In the United States, states, counties, cities, and localities can charge sales tax. Companies collect and remit sales tax to these government authorities for products sold to end users. Sales tax can also be charged to existing sales tax. For example, tax can be calculated on a sales invoice amount that already includes the tax from other jurisdictions.
- To set up this component, click the icon, enter Tax Jurisdictions, and select the relevant link.
- Click the New action to add a new tax jurisdiction, and enter information in the columns:
- Select a code, and click the Details action. A list of Tax Details is displayed for each code. Fill in the Tax Type, Effective Date, and the Tax Below Minimum fields.
- You can set up the Tax Type to indicate Sales and Use Tax, Sales Tax Only, or Use Tax Only to meet different tax requirements.
Expense/Capitalize jurisdictions and the POS Tax Amount total
On the Tax Jurisdictions page, the Expense/Capitalize field specifies how that jurisdiction's tax is treated during posting. When the field is left blank, the jurisdiction is a standard payable tax. When it is set to Expense or Capitalize, the tax for that jurisdiction is still calculated and posted to the appropriate general ledger accounts, but it is excluded from the combined tax rate that the POS uses to calculate and display the transaction's Tax Amount total.
This is most noticeable in tax areas that combine multiple jurisdictions, such as a Canadian tax area that includes both a GST jurisdiction and a PST jurisdiction. If the PST jurisdiction's Expense/Capitalize field is set to Expense or Capitalize, the POS still calculates and posts PST correctly, but the Tax Amount shown on the register only reflects the GST portion. The PST amount is not lost — it is calculated and posted — but it is intentionally left out of the displayed total because of the jurisdiction's Expense/Capitalize setting.
Note: When you set up GST and PST tax jurisdictions for Canada, check whether the Expense/Capitalize field is set on either jurisdiction before comparing the POS's displayed Tax Amount to the sum of the individual tax rates. A jurisdiction set to Expense or Capitalize is deliberately excluded from that displayed total.
Tax areas
Each tax area is a grouping of sales tax jurisdictions based on a particular geographic location. For example, the tax area for Atlanta, GA, includes three sales tax jurisdictions: city (Atlanta), county (Fulton), and state (Georgia). Business Central includes a limited set of tax areas with a default configuration, but you can change them and add new tax areas.
- To set up this component, click the icon, enter Tax Areas, and select the relevant link.
- Enter a code and a description. For example, a Tax Area could be a city such as Atlanta, GA., as shown below:
- Select a Tax Area, and click the Edit action.
- In the Lines FastTab, select which Tax Jurisdictions to include in that Tax Area code. Give the system a specific order in which to perform the tax calculation. This structure allows you to enter all those tax entities for the Tax Area to ensure you are charging the correct taxes at the correct time.
- Then specify the Tax Area for each individual Store Tax Area .