Tax Location Groups

Use the Tax Location Groups function to group tax locations into tax location groups, which determine sales and use tax rates. In Accounts Receivable, tax location groups are assigned to customers, recurring entries, ship-to addresses, and transactions. See Tax Locations for more information about tax locations.

  • In Accounts Payable, assign tax location groups to vendors, recurring entries, and transactions.
  • In Purchase Order, assign tax location groups to ship-to addresses and purchase orders.
  • In Accounts Receivable, assign tax location groups to customers, recurring entries, ship-to addresses, and transactions.
  • In Sales Order, assign tax location groups to recurring entries and sales orders.

You can also use this function to set up tax on tax. Tax on tax means that taxing authorities charge tax on the selling price of goods or services and taxes by another tax authority. When tax on tax is calculated, the first tax rate is calculated and subtotaled before the second tax rate is calculated and added for the total selling price.

Tax on tax is used primarily outside of the United States. Goods and services tax (GST) and provincial sales tax (PST) are examples of taxes that can require tax on tax capabilities. Contact your local tax authorities for more information.

The following example shows how you can use Tax Location Groups:

Suppose that Minnesota has a state sales tax and Minneapolis has a city sales tax. Sales in Minneapolis incur two sales taxes: one owed to Minnesota and the other to Minneapolis. This situation requires a tax location group that contains two tax locations: one for Minnesota and the other for Minneapolis.

The following example shows how you can use Tax Location Groups for tax on tax:

Suppose that Canada has a goods and serves tax (GST) and Quebec has a provincial state tax (PST), which also taxes the GST. When the tax location group is set up, Canada is the first-level tax location, and Quebec is the second-level tax location. In the Tax Group Detail dialog box, which appears after you select the second-level tax location, select Tax Level 1 to include the Canadian GST in Quebec’s PST. Sales with the Quebec tax location group ID incur a Quebec PST that is calculated on the goods and services total and on the GST.

Creating a Tax Location Group

  1. Click the New button, on the toolbar, to open a blank tax location group record.
  2. Enter the tax group ID in the Tax Group ID field if you are creating a new group, or select a tax group you want to edit.
  3. If you are creating a new tax location group, you can copy from an existing group by selecting an existing tax location group in the Copy From drop-down list.
  4. Enter a description of the new tax location group in the Description field.
  5. Select a type for the tax location group from the Type field.
    SelectTo designate the group as
    RegularRegular tax calculation and reporting of Sales/Purchase Tax.
    UseRegular tax calculation and reporting of Use Taxes. (excluded from invoice totals). NOTE: Set up a use tax location ID for each state in which you do business.
    Extended1Extended (1) tax calculation and reporting for international localization of Sales/Purchase Tax.
    Extended2Extended (2) tax calculation and reporting for international localization of Use Tax (excluded from invoice totals).
  6. Select the reporting method for the tax location group from the Reporting Method field.
    SelectTo
    CombinedNot print detailed tax information on invoices or reports.
    SeparatePrint detailed tax information on invoices.
  7. Select the tax location ID for each tax authority level of the group from the Level field(s).
    Note: Use the Tax on Level check boxes to set up tax on tax. The Tax Group Detail dialog box appears if you place a check mark in a Tax on Level check box for Levels 2 through Level 5. Clear the box(es) to enter tax location groups that do not use tax on tax.

  8. Select the Use with Tax Service checkbox and enter the Tax Location Acct number to enable the use of the tax service for calculating Avalara taxes for transactions associated with the selected Tax Group ID.

  9. Click the Save button, on the toolbar, to save the new tax location group.

Editing a Tax Location Group

  1. Select a tax group to edit from the Tax Group ID field.
  2. Edit the fields as necessary.
  3. Click the Save button, on the toolbar, to save any changes made to the tax group.

Deleting a Tax Location Group

  1. Select a tax group to delete from the Tax Group ID field.
  2. Click the Delete button, on the toolbar, to delete the selected vendor's record.
  3. Click Yes at the "Are you sure you want to delete selected record(s)?" prompt.