Tax File

These instructions are for Navigator File Management. For information on File Maintenance in the Green Screen (AS400), refer to File Maintenance

Associated Files

The Tax File determines how you charge taxes. It contains the tax rates in percentages for the states, cities, and counties to which your customers are subject. Once a tax record is established, you can insert its code into the customer's Billto File record, an order, or an invoice header screen. Each customer record or order can contain up to two tax codes, representing the applicable tax rates.

In the Tax File, you'll enter the percentage and create a description of the tax; some of your customers might want to know, for example, why an extra 1½% is being charged. The description appears beside the charge on invoices. You can enter the G/L account at the same time, or enter it later. You'll also enter the appropriate options for tax on freight, other taxes, and terms discounts.

To create new Tax Records, click Records and then select Create.

Field Name Description/Instructions
Tax Type Tax Code

The tax records you create has two settings:

  • The Tax Type should either be S for state tax or O for other tax. The O tax can be, for example, county, city, parish, or province.
  • The Tax Code, made up of two characters, represents a specific tax code.

For example, if the Tax Type is S, the Tax Code could be NC to represent the North Carolina State sales tax. If you are only assigning the O (other) code, make sure it is a cumulative percentage of the state, county, and city taxes. For example, if you have a simple tax structure in your state and are just reporting one number to the state, you can use either the S tax or the O tax. Enter the full tax percentage for either of them but not for both. When you assign these codes to the Customer File, if you enter both S and O tax codes, the system adds the two percentages and charges the customer the total per­centage of the two.

If you report your sales tax by state, county, city, or even MTA codes, we recommend that you use S for the flat state tax rate. Combine the city and MTA percentages into the O tax rate. The sales tax report shows the report by state and other tax. To report your sales tax for county, city, and MTA, you manually calculate them according to the appropriate percentages. You could create just one code for the O tax rate that includes county, city, and MTA.
Description Description of this tax code; for internal use; does not print on invoices. For example, you could enter New York State Tax.
Invoice Description

If a description is entered, replaces the generic description that normally appears on invoices.

Attention Canadian Users: GST and PST tax records should use this field, so GST or PST prints on all invoices.

You should consider using this field for all tax records in your system, so that invoices show the proper description of all taxes charged.
Last Changed Date on which the last changes were made to this record. You cannot change this field.
Tax Percentage Percentage of sales to be applied by this tax code; shows three decimal places.
G/L Account Liability general ledger account number to which this tax rate relates.
Cost Center Cost center, if any, to which this tax rate should relate. Normally, this field should be left blank. The system then relates each sale to the most applicable cost center from the invoice.
Tax on Freight

Enter Y if this tax is to be applied to freight charges as well as product charges.

Tax on Freight is applied to freight that is entered into the Freight field on invoicing. Do not confuse this option with the Tax on Delivery Charges option which is set in the Delivery Charges File.

For Canadian customers, if you need to tax GST only for freight then this field is the way to enter freight so that only GST is taxed and not PST.
Tax on Other Taxes Enter Y if this tax is to be applied to other taxes. For example, if this record is an O (other tax), Y indicates to tax the state tax. If this record is an S (state tax), Y indicates to tax the other tax.
Terms Discount On Tax Enter Y if terms discount should apply to the tax charged.
D/Del Enter D in this field to delete this record.

Associated Files