Tax Rules Terminology
Y.E.S! Tax Rules sales & use tax system automates your tax calculation
and reporting.
The following is an overview of the system's features and the information
provided:
A Tax Agency is a federal, state, county,
city, or a local tax authority, which mandates that a seller of goods
and services collects and reports the proper sales and use tax that is
determined by law. Each item for which you collect tax will have one or
more tax agencies that make up a tax rule.
Each item or service that you sell may be
taxed by Federal, State, county, city, and local tax agencies and as a
seller of these goods and services you have the responsibility to collect
and report all taxes to the correct tax agency. This Item Tax structure
is a "tax rule" for this item.
Each tax rule is made up of one or more tax
types, which is the actual tax collected for a tax agency, which will
receive the tax payable amount. So
a tax type is a tax (amount / percent) collected for one tax agency (tax
payable authority).
Local taxes include those imposed by school
and water districts, rapid transit authorities, police jurisdictions,
etc. The following are the seven (7) jurisdictions types which can be
defined.
Tax information is mapped
to ZIP number code. All
U.S. Postal Service ZIP codes with their associated states, counties,
and cities are included.
Tax information is mapped
to City name code.
Tax information is mapped
to county name code.
Tax information is mapped
to County State code.
Tax information is mapped
to county name code.
FIPS is an acronym for Federal Information Processing Standards.
Each state
and county in the United States is assigned a unique FIPS code by the
Federal government. In
a 5 digit FIPS code, the first two digits designate the state, and the
last 3 digits designate the specific county within the state.
Custom Code that uniquely
identifies user defined jurisdictions.
A Tax Split is a table that sets each tax
type actual taxation. There are three ways to fill in a Tax Split table,
they are Fixed rates, Maximum Rates and split Rates.
Fixed
Rates
Most jurisdiction
taxes are a set fixed percent or a fixed whole amount on an item.
Maximum
Rates
Some jurisdictions
tax only a limited dollar amount. Others allow only a maximum tax amount.
Split
Rates
Some jurisdictions
split their tax rates, imposing different rates below and above given
dollar amounts.
What
is tax Rounding?
Tax rounding is a method of choosing what
to do with the remainder of the tenth of a cent for each taxable transaction.
For each tax type (or tax), a default rounding method is needed to allow
for correct tax calculation. There are three tax-rounding methods to choose
from.
If the tenth of a cent is
greater than 0, then
the cent (tenth of a cent) is incremented up to the next cent (tenth of
a cent).
If the tenth of a cent is
greater than or equal to 5 then the cent (tenth of a cent) is incremented
up to the next cent (tenth of a cent). Otherwise the remaining tenth of
a cent is dropped.
The remaining
tenth of a cent is always dropped, regardless of the value.
In certain instances, county,
city, or local rates override the state rate, or each other's rate.
The dates on which current
and prior rates became effective.
All prior rates, through
January 1, 1994, are supplied.
The status
of whether freight is taxable or exempt, and the associated stipulations
and conditions.