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U.S. Sales Tax setup for Business Central

November 9, 2018

- Tax Posting Setup : Tax Business Posting Groups and Tax Product Posting Groups
- Tax Calculation is based on: Tax Groups, Tax Areas (with Tax Jurisdictions) and, Tax Details (which    are the %’s attached to the Tax Jurisdictions)
Assigning Tax Codes to Customers and Items

 

  • Tax Posting Setup

    • Tax Posting Setup is combo of Tax Business Posting Groups and Tax Product Posting Groups.

    • Each combination specifies the Sales Tax Liability (G/L) account tied to that combo.

    • Tax Business Posting Groups and Tax Product Posting Groups are just simple lists.

    • Don’t need to enter a Tax% in Tax Posting Setup, because that is done with Tax Areas, Tax Groups, and Tax Details

 

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    • Tax Calculation

      • Tax Areas

        • Tax Areas are simple lists of geographical areas, including a Non-Taxable entry.

        • Each Tax Area may contain more than one jurisdiction (e.g.: State, County, City, etc)

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  • Tax Groups

    • Tax Groups are simple lists, such as NON-TAXABLE and TAXABLE

    • Tax Groups have Tax Detail line called Tax Jurisdictions. Each Tax Jurisdiction in the list contains a specific % for the legal tax, based on the Tax Jurisdiction Code.

    • In the example below the State of Florida applies a 6% Sales Tax. Pinellas County 1%. City of Clearwater 0%.

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  • Tax Details

    • Tax Details is where the Sales Tax rates are entered for the combination of Tax Jurisdiction Code and Tax Group Code

    • Notice there are 2 Tax Groups, so the Tax Jurisdictions appear twice, once for each Tax Group Code.

    • A zero percent Tax Group Code (NON-TAXABLE) is always necessary for those sales exempt.

 

  • Assigning Tax Codes

    • Tax rates are decided by the Tax Area assigned to the Customer Card and the Tax Group Code on the Item Card

    • If the Customer is Tax Liable and is assigned a Tax Area Code which has Tax Jurisdiction Rates greater than zero; and the Item has a Tax Group Code of TAXABLE, then tax is automatically calculated for the Sales line item.

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