A/R Sales Tax

The Accounts Receivable module now has the capability of automatically generating sales tax for line items. This technical note will guide you through the process of setting up your tax codes, assigning the tax codes to line items, and/or customers. Once this setup process is complete, the system can automatically generate sales tax on your invoices.

Also keep in mind that the Sales Tax feature in AR is designed to be very flexible. If you decide, during invoice entry, that you want to either change or not use a tax code assigned to a line item, you do have the option to select a different tax code, or not use it at all.

Step 1: Setting Up Tax Codes

A Tax Code will need to be setup for each tax you would like the system to calculate. It will define the amount or percentage of the tax, as well as the account tax distributions. Setting up a Tax Code is very easy, and they can always be accessed for changes or modifications.

Tax Codes are accessed from the main DPHS menu under File Maintenance, as shown below:

Once you’ve selected Tax Codes from the above menu, the following screen will appear. Press F5 to insert a new Tax Code, or use Ctrl-L to search and select an existing tax code.

Tax Code - Enter a specific code to identify this tax.

Description – Enter in a description for this tax. The description entered here will be the description that displays on AR Invoices and can only be modified in the tax code setup

Once you have finished entering information into the fields above, press F2 to continue. The following screen will appear.

This section is where you define the distributions for the tax. You can have more than one distribution, and you also have the ability to classify a distribution as a fixed amount or percentage.

Tax Description – Enter in a description for this tax distribution.

Tax Rate – Enter in the Tax Rate, which will either be a fixed amount or a percent.

Percent? – Enter ‘Yes’ if the tax rate you entered is a percent. If the tax rate you entered is a fixed amount, enter ‘No’.

Tax Account – Enter the account that is to be used for this tax distribution. You may use Ctrl-L to search and select an account.

Multi-Property Databases Only:

Force Property – If you would like the system to automatically change the property portion of the account, based on what property is selected during invoice entry, enter ‘Yes’. Otherwise, if you would like the system to only use the account you specify here, enter ‘No’, and the system will never change the property portion of the account.

Once you have finished entering your tax distributions press F2 to save. Then you can enter in your next Tax Code. There are no restrictions on the number of Tax Codes you can create.

Step 2: Tax Specifications for Customers

The last step required is to set the tax fields for each of your customers. Customer records can be accessed from within A/R under File Maintenance > Customers. The tax fields can be found on page 2 of the customer record. See the screen below:

Calculate Tax – If this Customer is taxable, enter ‘Yes’; otherwise if the Customer is tax exempt, enter ‘No’.

Tax Code – If the Calculate Tax field has been set to ‘Yes’, you will be required to specify a Tax Code. You may use Ctrl-L to search and select a Tax Code.

F2 through the rest of the customer record to save.

Step 3: Assign Tax Codes to Items

Once you have finished entering in your Tax Codes, you now must assign the Tax Codes to your Items. Items can be accessed from within A/R under File Maintenance > Items. It is not required that every taxable item must have a tax code assigned. If an item is taxable and there is no Tax Code assigned, the system will use the Tax Code assigned to the individual customer (see previous section).

Taxable? – If the Item is taxable enter ‘Yes’. If an item is not taxable enter ‘No’.

Tax Code – If the Item is taxable, you may assign a Tax Code for this item. The system will automatically calculate the tax based on the information specified within the tax code record. This tax code will always override the tax code specified in a customer record. If you do not wish to assign a tax code, leave the field blank. Left blank, during invoice entry, the tax code will default to that specified in the customer record.

Press F2 to save & continue on to the next Item.

That’s it! The setup for A/R Sales Tax is complete. If you have further questions, please visit our website www.dphs.com OR contact Data Plus Support.