Managing Sales/Use Taxes, Procurement—Exercises

IMPORTANT
It is extremely important that you set up and work within your own site to maintain your data integrity. If you work within any other site, you will compromise your own exercise data as well as the data of other students. Predictable exercise results require that your data be isolated in your own site.

Basic Data Setup

Enter Site

Purpose: The purpose of this exercise is to customize your site to be used in the following exercises. The site must be connected to a company that uses the sales tax type, as specified below.

Windows:
Site
Sites per User

  1. Verify that your site is connected to company 10 (IFS Racing).
  2. Connect your site to your user as the default site.

General exercise for Enter Sites

Required Data

Setting up Sales Tax Conditions

Purpose: The purpose of this exercise is to show how to set up default sales/use tax values to be retrieved when entering purchase order lines.

Windows:
Company/Invoice
Tax Codes
Supplier

  1. Open the Company window, and click the Tax Information tab of the Invoice tab.
  2. Query for company 10 (a U.S. company). Verify that the Tax Regime field is set to Sales Tax and that the tax liability is of type TAX.
  3. Verify that the sales tax calculation method is set to IFS Applications.
  4. Open the Tax Codes window and create a sales tax code for the state for your delivery address. Enter an ID, a description, and a percentage in the respective fields, and enter or select Sales Tax in the Tax Type field.
  5. Create a new line and enter a use tax code for the state for your delivery address. Enter an ID, a description, and a percentage in the respective fields, and enter or select Use Tax in the Tax Type list.
  6. Save the record.

Note: Applicable tax codes can also be entered for cities or other tax jurisdictions in a similar manner. This can be useful to observe how total tax amount totals are accumulated, based on taxes from more than one taxation jurisdiction.

  1. Open the Supplier window and query for a supplier you have previously set up, or create a new supplier.
  2. Click the Address tab, then the Tax Code sub-tab.
  3. Verify that the Tax check box is cleared. If you do not clear this check box, the system will calculate taxes based on the ship-from address, and will ignore any values entered for the site's delivery address (on the company).

General exercise for Supplier.

Enter Delivery Address for Sales Tax

Purpose: The purpose of this exercise is to enter a taxable delivery addresses for your site. The information entered here will be used to provide default sales tax values when entering purchase order lines.

Windows:
Company/Address

  1. Open the Company window and click the Address tab.
  2. Enter a delivery address XX for your company if not previously done.
  3. Enter appropriate information in the General Address Info tab. Make sure the address is of type delivery. Make sure the address is connected to your site.
  4. Click the Tax Code tab, and select New.
  5. Select the Delivery Address Taxable check box.
  6. Click the Taxes tab, and select New.
  7. Use the List of Values to select a tax code of tax type, Sales Tax, from the Tax Code window. Click OK.
  8. Save the delivery record.

General exercise for Company Setup

Enter Purchase Part Record

Purpose: The purpose of this exercise is to create a record for a purchase part that is taxable, and to connect this purchase part to a primary supplier.

Windows:
Purchase Part
Supplier for Purchase Part

  1. Open the Purchase Part window and create a new record.
  2. Enter a purchase part, with a part number and description of your choice. Note the part number for later reference.
  3. Verify that your site is entered in the Site field.
  4. In the General tab, enter PCS as the purchase unit of measure in the Default Purch U/M field.
  5. Select the Taxable check box.
  6. Save the record.
  7. Right-click, then click Supplier for Part.
  8. Verify in the Supplier for Purchase Part window that opens, that your part number, description, site, purchase unit, and other default values appear.
  9. In the Supplier field, enter your supplier or use the List of Values to select your supplier.
  10. In the Price field, enter 100 in the first field, and USD in the second field to identify the price and currency.
  11. Verify that the Primary Supplier check box is selected.
  12. Save the record.

General exercise for Purchase Part
General exercise for Supplier for Purchase Part

Main Exercises

Using Default Delivery Address Sales Tax Values

Purpose: The purpose of this exercise is to show how to use default sales tax values entered for your delivery receipt address when creating purchase order lines.

Windows:
Purchase Order

  1. Open the Purchase Order window and create a new record.
  2. In the Supplier field, use the List of Values or manually enter the supplier for the purchase part you just created.
  3. Verify that the correct site appears in the Site field.
  4. Enter a date at least one week from today in the Receipt Date field.
  5. Save the record.
  6. Click the Part Order Lines tab and create a new record.
  7. In the Part No. field, use the List of Values or manually enter the number of the part you created in the exercise above.
  8. In the Quantity field, enter 20.
  9. Save the record.
  10. Note that the Part Taxable and Pay Tax fields are selected.
  11. Note the values in the Total Tax Amount field on the purchase order line and the Total Tax Amount field at the bottom of the tab. These values are calculated based on the order quantity, price, and the tax rates specified on the site's delivery address.
  12. Note that Ship-to is specified in the Tax Ship Address to indicate that the tax calculations are based on the delivery receipt address.

Modifying Sales Tax Values on Purchase Order Lines

Purpose: The purpose of this exercise is to show you several ways you can modify the default tax values that default when you enter purchase order lines. This would be useful for handling exceptions to the default rates and/or the taxable status of the part or the order line.

Windows:
Purchase Order

  1. Using the purchase order from the previous exercise, clear the Pay Tax check box, then save the record. Note that the total tax amounts disappear on the line and at the bottom of the tab.
  2. Select the Pay Tax check box and save the record again to return the order line to the original values.
  3. Clear the Part Taxable check box. Note that again the total tax amounts disappear on the line and at the bottom of the tab.
  4. Select the Part Taxable check box and save the record to return the order line to the original values.
  5. Select the order line, right-click and point to Order Line Details and then click Order Line Taxes to open the Purchase Order Line Tax Lines window.
  6. Note the tax code, tax percentage, and tax amount displayed on the tax line, and the tax amount at the bottom of the window.
  7. In the Tax Percentage field, change the value, then click Apply. Note that the tax amounts change in this window, but are not yet reflected in the Purchase Order window.
  8. Click Set to Default, then click Yes to return the values for the tax line to the original values.
  9. In the tax line, change the value in the Tax Amount field, then tab to the next field. Note that the tax percentage is recalculated and the value in the Tax Amount field at the bottom of the window also changes.
  10. Select the tax line again. Click Remove, then click Apply. Note that the tax line has been removed and the value in the Tax Amount field at the bottom of the window also changes.
  11. Click New to create a new tax line.
  12. With the cursor in the Tax Code field, click List to select an existing tax code. Note the changes in the Tax Amount fields.
  13. Click OK at any point in any of the above steps to transfer the modified tax line information to the purchase order line.

Use Taxes for Purchase Order Lines

Purpose: The purpose of this exercise is to show you how to set up the calculation and tracking of use taxes for taxable purchases when the supplier does not collect sales taxes

Windows:
Supplier
Purchase Order

  1. Open the Supplier window and query for the supplier used in the previous exercises.
  2. Click the Address tab, then click the Tax Code tab, select New and select the Tax check box.
  3. On the Taxes sub-tab, create a new line, then use the List of Values to select the tax code of tax type, Use Tax that you entered in step 5 of the Setting Up Sales Tax Conditions exercise above.
  4. Save the record. The system will now use the ship-from address for purchases of parts from this supplier, and use the default use tax values you have entered.
  5. Create a new purchase order, entering the supplier and a receipt date at least one week from today.
  6. Save the purchase order record.
  7. Create a purchase order line for a quantity of 15 of the taxable purchase part created above.
  8. Verify that the Part Taxable and the Pay Tax check boxes are selected.
  9. Note the values in the Total Tax Amount fields. Since a use tax is specified, no tax is displayed.
  10. Select the purchase order line, then right-click and point to Order Line Details and then click Order Line Taxes to open the Purchase Order Line Tax Lines window.
  11. Note that the use tax amounts are displayed in this window.
  12. If desired, modifications to the tax values in the tax lines can be done in a similar way to the previous exercise.

Note: Similar exercises can be completed for parts without part numbers using the No Part Order Lines tab. This tab does not have the Part Taxable field, so the taxable status of the no part order line is determined by the Pay Tax check box setting only.