Tax System - Aggregator Options
Overview
Inter-state sales in North America are subject to a myriad of rules and conditions to determine the tax rate(s) to apply.
Taxjar or Avalara offer the ability to calculate and return the rate to IQ to enable completing the invoicing process.
Two things are required to enable you tax system within printIQ.
-
Your system needs to be set to invoice by ‘Operation’ rather than by ‘Job’.
This generates an invoice line for each operation from the job and allows the appropriate tax code to be applied at the invoice line level. -
An API key for your subscription from TaxJar or Avalara
You would also flag all states where you have ‘Nexus’ (nexus is being considered to having a commercial ‘presence’ within that state for the purposes of collecting and filing returns).
Each state has different rules and requirements it applies.
PrintIQ does not hold any form of ‘Nexus’ status.
Sales Tax calculations are determined by the destination of the job. When the tax rate on an invoice is ‘Uncalculated’, printIQ makes a call and passes through your API key (to identify who you are) along with the ‘source’ address
(where the product is being shipped from) and the destination address (when the product is going to)
Armed with those details, the tax system returns the calculated rate accordingly.
Uncalculated Tax Rate
The Uncalculated Tax Rate needs to be set up as below.
Ensure ‘Uncalculated’ is ticked to mark the rate as Uncalculated. This will invoke the API call.
Enforce Quoting
This setting will only have an effect when applied to the ‘Default’ tax type.
If enabled, all quotes - irrespective of the tax type set against the selected customer, will use this rate to calculate the tax. Do not use if you have customers that are tax exempt.
Disable Operation Overrides
This setting would force the overriding of any tax rates set against operations.
This setting should be also off.
For a new invoice to seek tax rates, the customer will need to have the ‘Uncalculated’ tax rate associated with them at quote time – as the tax rate is carried through from the Quote through the Job and on to Invoicing. (simply changing a customer’s tax rate will have absolutely no effect on existing quotes, jobs or invoices).
You can set the ‘Uncalculated’ tax rate as a ‘default’ tax rate.
When creating a quote for a customer who has their tax rate set as ‘Default’, printIQ will look at the Tax Rate on the associated Site and if it’s set to anything other than ‘Default’ it will use that.
If the site also has it set as ‘Default’ then printIQ checks which rate is set as ‘Default’ and uses that.
Product Tax Categories
Taxjar & Avalara have set up pre-defined Product Tax Codes for certain product and labour types.
A up to date list of these category codes can be found at:
https//developers.taxjar.com/api/reference/#get-list-tax-categories
These categories can be introduced to printIQ using the General Ledger Accounts.
There are specific rules relating to some types of labour, for example Installation Services has a Taxjar Category of 10040.
T
o set up a GL account for this category, create or edit an account for Installation as shown in the image below.
The tax product code goes into External Product Code field.
The link to the right of the External Product Code field on the GL account opens the tax system categories list.
The category does not appear on the invoice but is passed through when determining the tax rates for that line on the invoice.
When creating an invoice from a job with the ‘Uncalculated’ tax rate, we will make a call to and get rates based off the jobs ‘from’ and/or ‘to’ address, the invoice line amount, and the product tax code (if set) to calculate the rate.
When the Invoice is created and before it is saved, the new tax rates should be applied automatically.
When you hover over the tax rate a popup appears showing exactly what was passed and what was returned.
The product tax code comes from the selected general ledger account on the invoice line and if you change the general ledger account you can then refresh the rate by selecting the tax jar rate after clicking on the tax type.
Note: Freight and handling lines do not calculate tax rates.
When a tax rate is calculated we log the from and to address passed to it, as well as the amount and the product code that was used so we don’t constantly need to call to get the rate if those details match. There is a database setting that allows you to decide how many days that lookup information is retained which would be useful for when you make changes to state nexuses and it needs to recalculate the rate.
This will be set by your Service Delivery Representative.
One final consideration is the format of your quote letter.
This will need to be checked to ensure it does not show a Tax Cost, as we do not call the tax system at Quote Time. Instead, it may require a note depicting the total is exclusive of Sales Tax.
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