Using the Sales and Use Tax Interface > Setting Up SUTI
  
Setting Up SUTI
GTM Setup Specific to SUTI
SUTI requires the following setup in GTM:
Define taxes.
Define tax type codes.
Verify presence of necessary tax accounts, sub-accounts, and cost centers in the General Ledger (GL) chart of accounts.
Associate tax rates with tax types.
Assign taxes.
Define and assign tax zones.
Use tax classes and tax usage codes to define exceptions to tax zones.
Define tax environments to assign tax types to tax zones.
Assign tax zones, taxability, and city tax liability to items, customers, suppliers, and entities.
Tax Types
Business transactions can be subject to many kinds of taxes—sales taxes, domestic import duties, inventory transfer taxes, royalty fees, and so on. In GTM, a tax that is specific to a region and is individually calculated and reported is a tax type.
Tax types used in Quantum calculations are identified by the suffixes shown in Tax Type Suffixes.

Tax Type Suffixes
 
Suffix
Description
VQ-00
Total of state, county, city, and district taxes
VQ-10
State tax
VQ-20
County tax
VQ-30
City tax
VQ-40
District tax
Example: Tax type CA-VQ-10 could be used to identify California sales tax, while VEN-VQ-20 could be used for Ventura County tax, but VQ-10-CA would not work.
Set up Quantum-specific tax types as required in Tax Type Maintenance (29.1.1).
Tax Zones
Regions that assess tax include countries, states, provinces, counties, districts, and cities. In GTM, a region that assesses tax, or is subject to the same set of tax types, is a tax zone. All customer, supplier, and company address records belong to a tax zone, and each transaction has at least one set of ship-from and ship-to tax zones.
In the Quantum system, every region, or jurisdiction, that collects taxes in the US and Canada is identified by a unique code, called a GeoCode. GeoCodes identify over 7000 locations within the US and Canada.
If you use Quantum to calculate taxes, US and Canadian tax zones in QAD ERP must correspond to Quantum GeoCodes. Use the Tax Zone Update Utility (29.12.13) to automatically generate tax zone records based on Quantum GeoCodes. See Customer, Supplier, and Company Addresses.
You can then associate QAD ERP customer, supplier, and company and entity address records with appropriate tax zones either during address maintenance activities or using the Tax Zone Update Utility. See Updating QAD Records with Quantum GeoCodes.
Tax Classes and Usages
Within a tax zone, a tax type can affect all people and items, or only some of them.
Using Quantum’s Tax Decision Maker (TDM) program, you can track exemptions or identify other kinds of tax exceptions by customer, supplier, customer or supplier tax usage code, item tax class, tax zone, site, GL entity, or a combination of these criteria. See Setting Up Quantum Tax Decision Maker (TDM).
To identify tax exceptions in TDM for groups of customers or suppliers, you must define the required groups in the QAD ERP application using customer and supplier tax usage codes instead of tax classes. Define customer and supplier tax usage codes as needed in Tax Usage Maintenance (29.1.9).
Note: In QAD EE, associate tax usage codes with the customer or supplier in the Tax Info tab of Customer Create (27.20.1.1) or Supplier Create (28.20.1.1). Tax data is read-only in Customer Data Maintenance (2.1.1) and Supplier Data Maintenance (2.3.1).
Two control settings provide additional ways to manage exceptions:
The system uses either the customer sold-to address or ship-to address depending on the value of Use Ship-To for Customer Exceptions in Tax Interface Control. See Use Ship-To for Customer Exceptions.
The Use Sold-To for Tax Usage Exceptions field determines which address that the QAD ERP application uses to supply a default usage code during order processing. See Use Sold-To for Tax Usage Exceptions.
You must specify items in the TDM database by QAD ERP item tax classes instead of individual item codes. Define item tax classes in Tax Class Maintenance (29.1.5). Associate them with individual item records in Item Master Maintenance (1.4.1).
Tax Environments
Before GTM calculates taxes, it determines which taxes apply to the addresses that ship and receive the goods—for example, state sales tax, local tax, and value added tax. In GTM, a tax environment is a set of tax types that applies to a combination of ship-from and ship-to tax zones and, optionally, a customer or supplier tax class.
When setting up tax environments in Tax Environment Maintenance (29.3.1), the number of tax types you specify for inclusion in a tax environment affects the performance of the Quantum tax calculation algorithm. Therefore, you should specify only the minimum number of tax types required for a given environment.
Example: If only state and county taxes are applicable for a given tax environment, you should associate only the appropriate state-level (suffix VQ-10) and county-level (suffix VQ-20) tax types with that environment.
GL Accounts
GL Accounts Used by GTM and SUTI shows the special accounts, including sub-accounts and cost centers, used by GTM and SUTI for general ledger (GL) reporting.

GL Accounts Used by GTM and SUTI
 
Account
Description
Sales tax
Credited for sales tax payable.
Updated by Invoice Post and Print (7.13.4) and Customer Invoice Create (27.1.1.1).
Note You must run Tax Interface Inv Post to Reg to update the Vertex Register database with posted invoice data from Invoice Post and Print and the Shipper Confirm functions.
Sales tax absorbed
Debited whenever your company absorbs tax instead of charging it to the customer. For example, if your company gives a customer a free replacement item, your company might still be liable for the tax.
Updated by Invoice Post and Print (7.13.4) and Customer Invoice Create (27.1.1.1).
Note You must run Tax Interface Inv Post to Reg to update the Vertex Register database with posted invoice data from Invoice Post and Print and the Shipper Confirm functions.
AP tax recoverable
Not used by SUTI.
AP tax retained
Not used by SUTI.
Before you set up tax rate records, you should verify that you have all the necessary tax accounts, sub-accounts, and cost centers in the GL chart of accounts. If any are missing, set them up.
The relevant GL maintenance functions are as follows:
GL Account Create (25.3.13.1)
Sub-Account Create (25.3.17.1)
Cost Center Create (25.3.20.1)
See User Guide: QAD Financials for details.
After you update your chart of accounts in the QAD ERP application, specify the default codes for new tax rate records in Domain/Account Control (36.9.24). If necessary, you can later override these codes for individual tax rates.
Tax Rates
In GTM, the tax rates associated with the tax type determine how the system calculates and posts tax amounts for each tax type.
When you use SUTI to calculate taxes, it uses the same calculation logic as GTM. Just like GTM, it needs to know which tax types apply, and which tax rate or rates apply for each type.
To use Quantum to calculate US and Canadian taxes, define the following field values in Tax Rate Maintenance (29.4.1) for each Quantum tax type.

Tax Rate Maintenance (29.4.1)
Tax Type
Enter any valid tax type supported by SUTI. See Tax Types.
Tax Rate
Leave blank. Tax rates are calculated automatically by Quantum.
Tax-By-Line
Set to Yes.
Tax Method
Specify method 20; otherwise, Quantum is not used to calculate taxes.
For tax rates with tax methods other than 20, GTM performs the tax calculations using standard GTM functionality, with no changes in setup or processing required. This ensures that you can use Quantum to calculate US and Canadian taxes while still using GTM for all other taxes.
Update Tax Allowed, Discount Tax at Invoice, Discount Tax at Payment
Set to No.
Customer, Supplier, and Company Addresses
For address tax data, see Customer Create (27.20.1.1), Customer Ship-To Create (27.20.2.1), Supplier Create (28.20.1.1), End User Create (27.20.3.1), and Business Relation Create (36.1.4.3.1).
Tax Zone
When SUTI is running, this field automatically defaults to the GeoCode—that is, tax zone—value that corresponds to the address information on this record. To automatically assign appropriate Quantum GeoCode values to all addresses in the system, or to a specified range of addresses, use the Tax Zone Update Utility (29.12.13). See Updating QAD Records with Quantum GeoCodes.
Taxable
Set this field to Yes for all Canadian and US addresses for which SUTI will be used to calculate taxes.
In City
Set to Yes to indicate that an address is within city limits for taxation purposes; otherwise, set to No to indicate that the address is not within city limits. Quantum uses this field value in its calculations to determine whether city tax is applicable for a transaction.
Items
In Item Master Maintenance (1.4.1), set Taxable to Yes for all items for which you want Quantum to calculate taxes.