How Taxes are calculated in Purchase Order Processing

TechKnowledge Content

SUMMARY

This article describes how taxes are calculated in Purchase Order Processing.


MORE INFORMATIONStep1 Advanced versus Single Schedule

Go to Company Setup Options(Setup - Company - Company - Options).If the Use Shipping Method when Selecting Default Tax Schedule option ismarked, the following table will explain which tax schedule will default on a Purchase Order in Purchase Order Entry (Transactions- Purchasing - Purch. Order Entry). If it is not marked,the default tax schedule assigned to the vendor’s purchase address will be the default.


The Tax Calculation option listed in the tablebelow can be foundwithin Purchase Order Processing Setup Options (Setup - Purchasing - Purchase Order Proc. - Options).


Tax Calculation Option

Purchase Order Type

Shipping Method

Default Tax Schedule

Prompt Name

Advanced

Drop-ship

Not applicable

Blank

Tax Schedule

Advanced

Standard

Pickup

Tax schedule assigned to the vendor’s purchase address

Purch Addr Tax Sched

Advanced

Standard

No Shipping Method

Tax schedule assigned to the vendor’s purchase address

Purch Addr Tax Sched

Advanced

Standard

Delivery

Purchases Tax Schedule assigned in Company Setup (Setup-Company-Company)

Company Tax Sched

Single Schedule

Not Applicable

Not Applicable


Tax schedule that is assigned as Single Schedule in
Purchase Order Processing Setup Options (Setup-Purchasing-Purchase Order Proc.-Options)

Tax Schedule ID



Step 2 The Item's Purchase Tax Option

In Item Maintenance (Cards -Inventory - Item) look at the Item's Purchase Tax Option line.The following table will explain which tax schedule will default for the item in Purchasing Item Detail Entry (Transactions - Purchasing - Purchase Order Entry - expansion box to the right of Item)


The tax schedule specified in Item Maintenance (Cards - Inventory - Item is always compared to determine which tax details to use. The item tax schedule that defaults for the item in Purchasing Item Detail Entry (Transactions - Purchasing - Purchase Order Entry - expansion box to the right of Item) is explained below:


Item

Default tax schedule

Inventoried Item - Taxable

Purchase tax schedule assigned to the item in Item Maintenance (Cards - Inventory - Item)

Inventoried Item - Nontaxable

blank

Inventoried Item - Based on vendor

default tax schedule assigned to the vendor's purchase address.

Non-inventoried Item

Tax schedule assigned to the non-inventoried items in the Purchase Order Processing Setup Options window


Based on Vendor Inventory Item:
If the shipping method that is assigned to the transaction is a PICKUP type, taxes are calculated for each detail in the schedule that is assigned to the purchase address of the vendor. No comparison is made. If the shipping method that is assigned to the transaction is a DELIVERY type, taxes are calculated for each detail in the schedule that is assigned to the default site. No comparison is made.

Step 3 Comparing tax schedules

The tax schedule defaulting within Purchasing Item Detail Entry (Transactions - Purchasing - Purchase Order Entry - expansion box to the right of Item) will be compared to another tax schedule. The other tax schedule used for comparison is listed in thetable below:


NoteThe tax details that are common between the two schedules will be used.

Tax Calculation Option

Inventory Control

Shipping Method

Default Tax Schedule

Prompt Name

Advanced

Not Applicable

No Shipping Method

Tax schedule assigned to the purchase order in Purchase Order Entry

Purch Addr Tax Sched

Advanced

Not Applicable

Pickup

Tax schedule assigned to the purchase order
Purchase Order Entry

Purch Addr Tax Sched

Advanced

Registered

Delivery

Purchase tax schedule assigned to the site in Site Maintenance (Cards - Inventory - Site)

Site Tax Schedule ID.

Advanced

Not Registered

Delivery

Purchases tax schedule assigned in Company Setup (Setup-Company-Company)

Company Tax Sched

Single Schedule

Not Applicable

Not Applicable

Tax schedule that is assigned as the single tax schedule in Purchase Order Processing Setup Options (Setup-Purchasing-Purchase Order Proc.-Options)

Tax Schedule ID



This article was TechKnowledge Document ID:26277

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