Tax Authorities

Owned by Stephen Juliano (Unlicensed)
Last updated: Jan 21, 2022 by Colleen Juliano
4 min read

Overview

As the old saying goes there are two constants in life and they are death and taxes. TRX Enterprise ™ deals with at least one of them very well. It seems as though every county and municipality has their own tax rate and they are constantly changing. In the Tax Authority screen those rates can be created and changed on an as needed basis. In TRX you now have two means of calculating tax percent. You can use the "Classic Calculations" or you can choose to uncheck the box and utilize our more detailed version of tax authority setup. 

  • SYS > Tax Authorities

Classic Calculations


To add a tax authority into TRX using classic calculations you would put your curser onto an open field or if there is none available put your cursor above the place you would like your field to be and press the insert item icon. 

  1. The Tax Authority Field will highlight it is here you can add a tax code identifier that can be up to 5 characters long. This will be the identifying field that will populate on all TRX forms and screens.

  2. After tabbing through you will need to enter the description, most people use the taxing authority name in this field.

  3. The Accrual Account is the General Ledger account that this tax code will be assigned to.

  4. State is the State that the taxing authority is located.

  5. Some jurisdictions require the taxing of shipping and others do not, a default check box is associated with each taxing authority. This is just a default setting and can be changed at the time of invoicing if needed.

After pressing the enter key the taxing authority will be added to the database and you will be prompted down to set up the minimum tax amount. At the first level this will almost always be .00. The maximum can be set at 99,999,999.00 if there is not a level break. Some tax authorities can have leveled tax rates something like 7% for the first 5000.00 and then 6% after. In this case you would use a second line and set the first maximum to 5000.00. After entering the taxing agency press  the save icon. 

Non Classic Calculations

 
The non-classic calculations were developed for those special occasions when the normal can no longer be applied. This screen has the added advantage of an Agency and Tax All Amounts check box. You can either use one or the other format; we do not allow you to switch between the two. For our new clients we recommend using the Non Classic Calculations method for all tax rates. As an example of the effectiveness of this screen we just need to look at Memphis Tennessee. The base rate is 7 percent, but on top of that the city charges 2.25 for the first 1600.00. At 1600.01 the city stops collecting but the county will start getting 2.75% for the next 1600.00. After 3200.01 the tax rate drops from 9.75 to the state base rate of 7% for all other amounts. The above tax setup will apply the 7% to everything as a base rate, and then let the smaller amounts piggyback on it.

Important Tax Authority Notes

  • Sales Tax Calculations - TRX will calculate sales taxes by unit price per the line item amount – not the total invoice. The sum of all line items tax becomes the total tax.

  • Tax authorities cannot be deleted.

  • Tax Authorities Report - A report showing all tax authorities and the tax table information can be printed by clicking on the Print Report icon on the toolbar. 

  • Taxability - Everywhere a tax can be entered the line item taxability can be overridden with a check box on the line item level.

  • Tax Exempt Customers - Customers that are exempt from paying sales tax need to be set up with a tax authority, but the Taxable checkbox should be unchecked. The tax authority should be the tax authority used if the customer were taxable. When entering orders and invoices for the nontaxable customer, all items, even those marked taxable, will not have tax calculated and the total tax of the order or invoice will be zero. The customer's tax exemption number should be entered in the Tax Exempt Number field on the Additional Info Tab of the customer enter/edit screen.

  • Sales Tax Override - Some items in inventory are taxed at all times regardless of the customer purchasing the item even tax exempt customers. These items should have the sales tax override checkbox set in the attributes tab in inventory item setup. This will force sales tax on all customers regardless of the customer's sales tax exemption status.