How to: Set Up Sales Tax Jurisdictions

  • Article

In the United States, states, counties, cities, and localities can charge sales tax.

In Canada, the federal government and provinces can charge sales tax. Companies collect and remit sales tax to these government authorities for products sold to end users.

Sales tax can also be charged to existing sales tax. For example, tax can be calculated on a sales invoice amount that already includes the tax from other jurisdictions.

Tax amounts must be detailed in documents for each tax jurisdiction in Canada. Up to four jurisdictions can be displayed in a document, and jurisdictions that have the same print order are combined when they are printed.

Each tax area is a grouping of sales tax jurisdictions based on a particular geographic location. For example, the Miami, Florida, tax area includes three sales tax jurisdictions: city (Miami), county (Dade), and state (Florida).

To set up sales tax jurisdictions

  1. In the Search box, enter Tax Jurisdictions, and then choose the related link.

  2. In the Tax Jurisdictions window, on the Home tab, in the New group, choose New.

  3. In the New - Tax Jurisdictions window, fill in the fields as described in the following table.

    Field Description

    Code

    The code that you want to assign to the tax jurisdiction. You can enter up to 10 alphanumeric characters.

    Description

    A description of the tax jurisdiction.

    Tax Account (Sales)

    The general ledger account that you want to use to post calculated tax on sales transactions.

    Tax Account (Purchases)

    The general ledger account that you want to use to post calculated tax on purchase transactions.

    Reverse Charge (Purchases)

    The general ledger account that you want to use to post calculated reverse-charge tax on purchase transactions.

    Report-to Jurisdiction

    The tax jurisdiction that you want to associate with the jurisdiction that you are setting up.

    Country

    The country/region used for the sales tax calculation.

    Calculate Tax on Tax

    Select to calculate additional sales tax for the current jurisdiction. This tax is on top of the sales tax that has already been charged for previous jurisdictions. This is calculated based on the principle of tax on tax.

    Hh933927.Important(en-us,NAV.90).gifImportant
    This field is available in the Tax Jurisdiction window, but it is not shown by default. To select the field, you must first add the column that shows this field. For more information, see Personalize the User Interface.

    Print Description

    The description that prints on documents in place of the jurisdiction description.

    Hh933927.Important(en-us,NAV.90).gifImportant
    This field is available in the Tax Jurisdiction window, but it is not shown by default. To select the field, you must first add the column that shows this field. For more information, see Personalize the User Interface.

    Print Order

    The order in which the jurisdictions are printed.

    Hh933927.Important(en-us,NAV.90).gifImportant
    This field is available in the Tax Jurisdiction window, but it is not shown by default. To select the field, you must first add the column that shows this field. For more information, see Personalize the User Interface.

  4. Choose the OK button.

To set up sales tax areas

  1. In the Search box, enter Tax Areas, and then choose the related link.

  2. In the Tax Areas window, on the Home tab, in the New group, choose New.

  3. On the General FastTab, fill in the fields as described in the following table.

    Field Description

    Code

    The code that you want to assign to the tax area.

    Description

    The description for the tax area.

    Country

    The country/region used for the sales tax calculation.

    Round Tax

    The rounding amount used for the tax.

    Use External Tax Engine

    Select to indicate that an external sales tax engine is to be used when this tax area code is used.

  4. On the Lines FastTab, fill in the fields as described in the following table.

    Field Description

    Tax Jurisdiction Code

    The tax jurisdiction code.

    Jurisdiction Description

    This field is populated when you enter the tax jurisdiction code.

    Calculation Order

    The order in which tax for each jurisdiction is calculated.

  5. Choose the OK button.

See Also

Tasks

How to: Set Up Sales Tax
How to: Set Up Sales Tax Groups
How to: Set Up Sales Tax Details
How to: Set Up Unrealized Sales Tax and Sales Payment Discounts
How to: Set Up Use Tax and Purchase Tax