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Creating Tax Authorities

A tax authority is any entity that has the authority to collect taxes from your company. For example, you will probably need to create a tax authority for your state or province, as well as the federal government. You may need to create additional tax authorities such as region, county, or city depending on the context in which your company exists. These tax authorities are combined into tax codes, which are assigned to customers. You use tax authorities to define which tax flags are taxable and what rate to tax each flag. There are six default tax flags in e-automate. They are:

Item

Labor

Freight

Travel

Miscellaneous

None

Each of the above tax flags can be defined using a tax authority. Within the tax authority you define how much tax each flag is to be assessed and whether or not there are specific rules (Tax Exceptions) for a specific tax flag. The tax authority is also used to set an invoice exception. Invoice exceptions are rules that e-automate uses to constrain the amount of total tax that can be charged by authority per invoice.

If your state has unique taxing laws you will find the invoice exceptions, tax flag exceptions, and item unit flag exceptions useful in assessing the correct tax amounts. For more information on tax exceptions, see the topic, Creating Tax Exceptions.

Getting to the TransactionGetting to the Transaction

From the Tools menu, select Lists and Codes to open the Lists and Codes window.

In the Select a list or code type field, use the drop-down menu to select Tax Authorities.

Click [New] to open the New Tax Authority window.

Basic InformationBasic Information

Complete the following fields as appropriate:

Tax authority: Name of the tax authority.

Type: Select the type of tax authority you are creating. You can classify the type as State, County, City, or Other.

Note: e-automate uses this classification to assist your end users in determining which tax code to assign when creating new customers.

State: The state or province in which this tax authority exists.

Description: Brief description of the tax authority.

Liability account: General ledger account used to accumulate taxes associated with this tax authority. This same account should be used when paying the tax to reduce the liability.

Invoice exception: Invoice level exception for this tax authority.

Note: Invoice exceptions tell e-automate the maximum dollar amount of tax that can be charged for this tax authority per invoice. If you choose to create an invoice exception from within the New or Edit Tax Authority windows, e-automate only allows you to identify a single tax limit per invoice.

In the Charge tax on region, use the lookup to select a tax flag for which you want to assess tax.

Note: Tax flags available within e-automate are not user defined. If you need additional tax flags, ECI Software Solutions can add customized tax flags for a fee. Contact Customer Care for more information.

Click [QuickAdd] to add the flag to the region.

Note: By adding a tax flag to the Charge tax on region, e-automate can assess taxes for charges on transactions associated with the added tax flag. e-automate uses the rate identified in the Rate field for calculating the tax.

Repeat steps 2 and 3 until you have added all necessary tax flags for your tax circumstances.

To remove a tax flag from the Charge tax on region, select the tax flag from the list and click [Remove].

Tax Flag Rates and ExceptionsTax Flag Rates and Exceptions

As needed, do one or more of the following:

If for a specific tax flag you need to charge a rate different from that specified on the tax authority:

From the Charge tax on region, select the tax flag.

Click [Edit] to open the Edit Tax Authority Detail window.

In the Method field, select either Absolute or Percent of Authority Tax Rate.

Note: Choose Absolute to identify a completely different rate for the selected tax flag. Choose Percent of Authority to charge a percentage of the rate identified in the tax authority Rate field.

If you selected Absolute as the method in the Value field, enter the tax rate to be charged for this tax flag. If you selected Percent of Authority as the method, enter the percentage of the tax authority rate to be charged.

Note: If you select Absolute in the Method field, e-automate multiplies the Value times the price to calculate the tax charges. If you selected Percent of Authority Tax Rate, e-automate first multiplies the Value times the tax authority rate (Rate from the previous window) and then multiplies the result by the price to calculate the tax charges. If you identify a different rate in the Tax Authority window, e-automate will use the Value and method identified in the window over the tax authority rate.

Associate a Per Tax Flag exception. A Per Tax Flag exception tells e-automate to group all of the items that share the same tax flag on an invoice and apply taxes based on the rules defined in the exception.

In the Per Tax Flag field use the lookup to select the exception.

Note: For information on creating tax exceptions, see the Creating Tax Exceptions topic.

Associate a Per Item Unit exception. A Per Item Unit exception tells e-automate to apply tax rules individually to each charge (item) on an invoice.

In the Per Item Unit field use the lookup to select the exception.

Note: For information on creating tax exceptions, see the Creating Tax Exceptions topic.

Click [OK] to save the changes and close the Tax Authority Detail window.

Repeat steps 1 and 2 as necessary for any additional tax flags.

Completing the TransactionCompleting the Transaction

Click [OK] to save the tax authority to the database. For more information on creating tax authorities, see Additional Info - Invoice Exceptions, Additional Info - Per Tax Flag Exceptions, and Additional Info - Per Item Unit Exceptions.