NorthScope allows users to create Tax Classes, which can be applied to individual transactions in order to charge taxes on the taxable items on that transaction. Tax Classes are made up of individual tax details, which determine the calculations of the taxes as well as the GL Account to which taxes for the corresponding tax detail are posted. When a tax class is applied to a transaction, all tax details assigned to that tax class are charged on each taxable item on the transaction. The transactions that support sales tax include Fisherman Sales, Tender Resales, Customer Sales, and Employee Sales. However, each of these transactions can be set to enable or disable sales tax using the Company module preferences.
Required Prerequisites
Optional Prerequisites
Tax Classes do not integrate to the host system. However, because tax classes can be applied to transactions, the financial effects of these applied taxes are integrated to the host system as part of the posted transaction's journal entry.
Tax Details are assigned to Tax Classes, which are then assigned to individual transactions. The tax details on a tax class determine the amount of taxes that will be charged on the transaction as well as the GL account to which the sales tax charges will be posted. Therefore, tax details must be created in order to create tax classes.
To create a tax detail, expand the Company module and select Tax Details. This will open the Tax Details list view. From the list view, click the New toolbar icon, which will open the list view in edit mode with five new lines for data entry. A new tax detail can be created with the following fields:
In order to create a new tax class, expand the Company module and select Tax Classes. This will open the Tax Classes list view. From the list view, click the New toolbar icon, which will open a new Tax Class record view. New Tax Class record views open with the following header fields, all of which are required:
Once the Tax Class and Currency have been entered and selected respectively, the tax class can be saved. To save the tax class, click the Save toolbar icon. This will refresh the record view and render the following changes:
In order for a Tax Class to calculate any taxes when applied to a transaction, the tax class must have tax details assigned. In order to assign tax details to the tax class, simply select the tax detail's checkbox and click save. Clicking save will refresh the grid to display the assigned tax details at the top of the grid list. Multiple tax details can be assigned to a tax class but it is not required that a tax class has any tax details assigned. Tax details can be removed from a tax class at any time by unchecking the tax detail's corresponding checkbox and clicking save.
In order for taxes to be charged on a transaction, the transaction must include items that are eligible for sales tax. In order to make an item eligible for sales tax, navigate to the Item's record view and open the Properties tab. Beneath the Group: Other, there is a property called Taxable for Sales, which defaults to 'No'. Set this property selection to 'Yes' and save in order to allow sales tax to be charged on that item.
Tax classes can be made to default on a transaction based on the entity to which the sale is being made or from which the return is being made. In order for the Tax Class to default, the Customer's/Vendor's/Employee's record view must have the Tax Class property value selected. To do this, navigate to the entity's record view, open the Properties tab, and select the desired default tax class from the Tax Class field drop-down menu. Once this property is saved, any sale transaction made to the entity will default to the entity's Tax Class. However, the Tax Class is always editable.
Note: Only tax classes that are assigned the same currency as the entity will display in the Tax Class lookup.
The functionality to charge taxes is only applicable to Fisherman Sale, Tender Resale, Customer Sale, and Employee Sale transactions. For the functionality to be enabled on each of these transactions, the corresponding Company preferences must be set to enable sales tax. If the preference is set to enable sales tax for each of these transactions, then the Tax Class header field on each of these transactions will be enabled. When a transaction is created, the Tax Class field will default to blank. If the user manually selects a Tax Class that shares the same currency as the selected entity and saves, the Tax Class will remain selected. However, if the user selects a Tax Class that does not share the same currency as the selected entity, the entity's default Tax Class will be selected upon save. The Tax Class field will be editable until the transaction is approved or posted, at which time the field becomes disabled.
Once a transaction is applied a tax class, taxes will be calculated based on the tax details assigned to the tax class for each item that is deemed 'Taxable for Sales'.
If the transaction results in taxes being calculated, a single non-editable line item will be displayed with the following values:
Each time the transaction is saved from or to a status of New, the tax line will be recalculated.
When a transaction with taxes is posted, each tax detail's posting account will be credited if the tax amount is positive or will be debited if the tax amount is negative. Therefore, if a transaction is saved from a status of 'Approved' to 'Ready to Post', the taxes will NOT be recalculated.
Note: Because Customer and Employee Sales share the same initial transaction record view, if the preference to 'Enable Sales Tax' is set to 'No' for either of these transactions, the Tax Class header field will be disabled on the New Sale window until the transaction is saved and it can be determined whether the transaction is a Customer or Employee Sale and has sales tax enabled.
The City Sales Tax report can be ran by expanding the Purchasing module, clicking Reports, selecting the City Sales Tax report and clicking Run Report. Then, the user can enter the parameters for the report. These parameters include the Start Date and End Date, which determines the range of transactions that will be displayed, as well as Tax Class, which allows the user to select the Tax Class(es) to include on the report. Once the parameters have been entered, click View Report.
The City Sales Tax report will display the following information per transaction, grouped by Tax Class then grouped by entity:
The totals are then summed per entity and then per Tax Class.