U.S. Tax Calculation

In a US tax environment, sales taxes can be calculated for state, county, and city.  The rate to be used for each type of tax is specified on each sales order header, quote order header, and invoice header.  For each detail line, you specify whether or not the item is taxable.  MAC-PAC will total the taxable lines and apply the state, county, and city tax percentages to that total.  The resulting sales tax amount will then be added to the order total.

Note that tax processing is not performed for customers where the home/export flag is set to E (for export).

Taxes are automatically recomputed during sales order maintenance, quote order maintenance, and shipping and billing based on changes in quantity and taxable status.  Once the order is shipped and billed, the appropriate record on the Customer Master file is updated for the total tax charged.  At period end, special tax registers are produced to summarize the period's tax activity.  These reports provide the accountant with a convenient method of ensuring the accurate allocation, collection, and redistribution of taxes.

In addition, MAC-PAC interfaces with Vertex, a third-party tax package.

Hierarchy for Defaults

Tax codes are entered on each open item header.  The values on the invoice header default from the corresponding sales order.  The values on the sales order default from the Customer Master file.

Each open item line specifies whether or not taxes should be calculated for that line.  The value for the flag defaults from the item's Warehouse Balance file record.

Steps to Setting up and Working in a US Tax Environment

1.   Define processing options:

a.   Set the system-wide address format to US format on Reference File category 133.

b.   Set the VAT flag set to N for US tax processing for each company/location that will US tax processing.

c.   Set the TAX flag to N on category 029 for the system, company, or company/location (depending on the currency level)

2.   Set up tax information:

a.   Enter state codes in category 326.

b.   Set up state tax codes on category 304.

c.   Set up county tax codes on category 305.

d.   Set up city tax codes on category 306.

3.   Determine which items are taxable.

4.   Define customer information:

a.   Home/export flag

b.   Taxpayer ID

c.   Default state, county, and city tax codes

5.   Define tax information for items:

a.   On the Warehouse Balance file, set the Taxable flag to Y or N, depending on whether or not the item is subject to sales tax.

6.   Enter sales orders:

a.   Modify tax codes on header, if necessary.

b.   Modify the Taxable Item flag on each detail line as necessary.

Vertex Processing

Vertex is a third-party tax calculation package that interfaces with MAC-PAC to calculate domestic taxes for U. S. based clients.  Vertex processing occurs for open distribution lines in both online and batch modes.

In the Accounts Receivable module, MAC-PAC gathers information for taxable items and transmits the data to Vertex.  Tax information is gathered and processed during the AR Open Item Entry and Maintenance conversations.  The MAC-PAC /Vertex interface gives you the option to calculate taxes with data from Sales Order Maintenance conversation or from the Invoice and Debit/Credit Memo Entry conversation.

MAC-PAC relies on various geocodes, which are location codes that Vertex uses for processing, and indicators to determine which distribution lines will be passed to Vertex for calculation.  Specifically, MAC-PAC reviews the location geocode field and city in-out indicator field for the specific company/location on the Ship-to Customer file.  These fields are located on the Sales Information screen in the Customer Master Maintenance conversation. 

During processing at the detail level, MAC-PAC displays the transaction code field on the second line of the Detail Subfile on the Invoice and Debit Credit Memo processing.

When initially installing MAC-PAC, you must make a choice of installing either U. S. Taxes processing, which supports either Vertex, GST, or VAT processing.