Processing Sales Order with Sales Tax

DEACOM provides three different methods for calculating sales taxes. The three methods are not compatible, customers need to choose one or the other. Deacom does not endorse any one method over the other. The summary of these methods are detailed in the table below. Additional information and links for each of these methods is listed beneath the table.

Tax Regions

Tax Jar

Avalara
  • No additional cost
  • Requires you to maintain tax rates
  • Requires you to enter tax regions on customers
  • Native Sales Tax Reports in DEACOM
  • Subscription to TaxJar
  • Best for basic Sales Tax transactions
  • Automatic filing
  • Reports are in TaxJar
  • Subscription to Avalara
  • Handles more advanced taxes
  • Handles VAT tax
  • Automatic filing
  • Reports are in Avalara
  • Able to handle GPS coordinates
  • Tax Regions - Tax Regions define the Tax Rates that will be charged and the General Ledger accounts to which tax amounts will be posted. Once created, Tax Regions may be assigned to Facilities, Customers, Vendors, and/or Zipcodes within DEACOM. While prior versions of DEACOM allowed the assignment of up to two Tax Regions, beginning in version 15.00, the "Tax Region 1" and "Tax Region 2" fields have been replaced with a separate Tax Region tab, allowing users to have more then two Tax Regions where necessary. In addition, Ship-to's may be marked as Tax Exempt, which will trigger the system to refrain from adding tax during order entry. See the Managing Customers Using Tax Regions page for information on using Tax Regions.
  • TaxJar - DEACOM's integration with TaxJar allows companies to automate sales tax calculations and auto file state taxes. Taxes are recorded in TaxJar automatically at the time of shipment, provided the order being shipped has a tax order line that is TaxJar generated. Users can then file taxes automatically by logging into the TaxJar application and completing the necessary steps. Complete information is available via the Calculating Sales Taxes using TaxJar page.
  • AvaTax - DEACOM’s integration with Avalara automates sales tax calculations, reporting and filings. The process involves the calculation of sales taxes at the time of order entry and again at the time of order shipment, to update any rates or quantities which may have changed. Taxes are recorded in AvaTax automatically at the time of shipment, provided the order being shipped has a tax order line that is AvaTax generated.  Users will need to file taxes automatically by logging into the AvaTax application, verifying the information, and completing the necessary steps. Complete information is available via the Calculating Sales Taxes using AvaTax page.  

Configuration

Refer to the Entering Sales Orders and Entering Purchase Orders landing pages for Configuration information. Additionally, Tax Regions and Tax Exemption Groups should be configured and linked to Customer/Vendor records prior to entering an order. For information on how to do this, refer to the Managing Customers Using Tax Regions page. If using the TaxJar or AvaTax options, all configuration information is available via the links provided in the previous section.

Process

What is the Sales Tax Hierarchy?

Tax Regions may be assigned to Facilities, Customers, Vendors, and/or Zipcodes. Deacom uses the following Sales Tax Hierarchy to assign the appropriate Tax Rates on Sales and Purchase Orders:

  1. Facility Tax Region(s)
  2. Customer/Vendor Tax Region(s)
  3. Zipcode Tax Region(s)

Based on the above hierarchy and the option for Ship-to Companies and/or Parts to be marked as exempt, the following is how the system will evaluate tax:

  • DEACOM will assign the Tax Region that is set on the Facility first.
  • If none exists, the system will move to checking the Customer/Vendor record.
  • If there is no tax assigned to the Customer/Vendor record itself, but the Zipcode assigned to the Customer/Vendor record matches a Zipcode that has tax assigned, the tax assigned to the Zipcode will be charged to the order.
  • If the Part being used is marked as exempt but the Ship-to is not, the order will remain taxed.
  • If the Part is not marked as exempt but the Ship-to is, the order will not be taxed.
  • If both are marked as taxable, the order will be taxed.
  • If both are marked as exempt, the order will not be taxed.

Note: If the "Override Facility Tax" flag is marked as true on the Ship-to record, the order will inherit the tax associated with the Ship-to record as opposed to the Facility.

What is different between processing an order with or without tax?

From a process perspective, there is no difference, unless the system defaults will be modified. When entering Sales or Purchase Orders, the tax is automatically added and appears as an additional line item on the order. From an accounting perspective, when processing payments, tax revenue/payments will be posted (credited for Sales Orders or debited for Purchase Orders) as a separate line to the Account selected on the Tax Region or the "Sales Tax Account" via the Accounts Receivable tab in Accounting > Options. if using the TaxJar or AvaTax integrations.

If the Ship-To Company has the Tax Exempt field checked and no date in the Exemption Expires field, then a tax line will not be added on sales orders entered for this Ship-To Company. If the Ship-To Company has the Tax Exempt field checked and a date in the Exemption Expires field, then entering a sales order for this Ship-To Company with an ordered date prior to, or on the date entered in the Exemption Expires field will result in no tax line being added to the order. If entering a sales order with an ordered date after the date set in the Exemption Expires field, then a tax line will be added to the order if the order contains items marked as sales taxable.

Click the following links for information on how to perform the processes of entering, shipping, invoicing, and receiving payment for Sales Orders or entering, receiving, entering invoices, and processing Accounts Payable for Purchase Orders.

Reporting

If you are using Tax Regions within DEACOM, there is a sales tax report that is available in Accounting reports. This report will show the tax region, customer, facility date shipped, gross amount, taxable amount and the tax amount.  It can be subtotaled by Tax Region to make filing the state returns easier. 

If you are using the TaxJar or AvaTax integrations, the sales tax report in DEACOM is not populated.  Both TaxJar and Avalara offer comprehensive sales tax reports.  

FAQ & Diagnostic Tips

My Ship-to Customer (or Facility or Zipcode) has a Tax Region assigned to it, but tax is not appearing on the Sales Order. Why?

Check the Inventory > Item Master > Properties tab for the Part being added to the order. The "Sales Taxable" flag must be checked off for tax to be automatically added to the new order.

  • Note: if creating a Purchase Order, the "PO Taxable" flag must be checked off.