How to: Set Up Sales Tax Jurisdictions

In the United States, states, counties, cities, and localities can charge sales tax.

In Canada, the federal government and provinces can charge sales tax. Companies collect and remit sales tax to these government authorities for products sold to end users.

Sales tax can also be charged to existing sales tax. For example, tax can be calculated on a sales invoice amount that already includes the tax from other jurisdictions.

Tax amounts must be detailed in documents for each tax jurisdiction in Canada. Up to four jurisdictions can be displayed in a document, and jurisdictions that have the same print order are combined when they are printed.

Each tax area is a grouping of sales tax jurisdictions based on a particular geographic location. For example, the Miami, Florida, tax area includes three sales tax jurisdictions: city (Miami), county (Dade), and state (Florida).

To set up sales tax jurisdictions

1. In the Search box, enter Tax Jurisdictions, and then choose the related link.

2. In the Tax Jurisdictions window, on the Home tab, in the New group, choose New.

3. In the New - Tax Jurisdictions window, fill in the fields as described in the following table.

   Field	Description
   Code	The code that you want to assign to the tax jurisdiction. You can enter up to 10 alphanumeric characters.
   Description	A description of the tax jurisdiction.
   Tax Account (Sales)	The general ledger account that you want to use to post calculated tax on sales transactions.
   Tax Account (Purchases)	The general ledger account that you want to use to post calculated tax on purchase transactions.
   Reverse Charge (Purchases)	The general ledger account that you want to use to post calculated reverse-charge tax on purchase transactions.
   Report-to Jurisdiction	The tax jurisdiction that you want to associate with the jurisdiction that you are setting up.
   Country	The country/region used for the sales tax calculation.
   Calculate Tax on Tax	Select to calculate additional sales tax for the current jurisdiction. This tax is on top of the sales tax that has already been charged for previous jurisdictions. This is calculated based on the principle of tax on tax. Important This field is available in the Tax Jurisdiction window, but it is not shown by default. To select the field, you must first add the column that shows this field. For more information, see Personalize the User Interface.
   Print Description	The description that prints on documents in place of the jurisdiction description. Important This field is available in the Tax Jurisdiction window, but it is not shown by default. To select the field, you must first add the column that shows this field. For more information, see Personalize the User Interface.
   Print Order	The order in which the jurisdictions are printed. Important This field is available in the Tax Jurisdiction window, but it is not shown by default. To select the field, you must first add the column that shows this field. For more information, see Personalize the User Interface.

4. Choose the OK button.

To set up sales tax areas

1. In the Search box, enter Tax Areas, and then choose the related link.

2. In the Tax Areas window, on the Home tab, in the New group, choose New.

3. On the General FastTab, fill in the fields as described in the following table.

   Field	Description
   Code	The code that you want to assign to the tax area.
   Description	The description for the tax area.
   Country	The country/region used for the sales tax calculation.
   Round Tax	The rounding amount used for the tax.
   Use External Tax Engine	Select to indicate that an external sales tax engine is to be used when this tax area code is used.

4. On the Lines FastTab, fill in the fields as described in the following table.

   Field	Description
   Tax Jurisdiction Code	The tax jurisdiction code.
   Jurisdiction Description	This field is populated when you enter the tax jurisdiction code.
   Calculation Order	The order in which tax for each jurisdiction is calculated.

5. Choose the OK button.

See Also

Tasks

How to: Set Up Sales Tax
How to: Set Up Sales Tax Groups
How to: Set Up Sales Tax Details
How to: Set Up Unrealized Sales Tax and Sales Payment Discounts
How to: Set Up Use Tax and Purchase Tax