version 2017
Disclaimer This document is for informational purposes only and is subject to change without notice. This document and its contents, including the viewpoints, dates and functional content expressed herein are believed to be accurate as of its date of publication. However, Epicor Software Corporation makes no guarantee, representations or warranties with regard to the enclosed information and specifically disclaims any applicable implied warranties, such as fitness for a particular purpose, merchantability, satisfactory quality or reasonable skill and care. As each user of Epicor software is likely to be unique in their requirements in the use of such software and their business processes, users of this document are always advised to discuss the content of this document with their Epicor account manager. All information contained herein is subject to change without notice and changes to this document since printing and other important information about the software product are made or published in release notes, and you are urged to obtain the current release notes for the software product. We welcome user comments and reserve the right to revise this publication and/or make improvements or changes to the products or programs described in this publication at any time, without notice. The usage of any Epicor software shall be pursuant to an Epicor end user license agreement and the performance of any consulting services by Epicor personnel shall be pursuant to Epicor's standard services terms and conditions. Usage of the solution(s) described in this document with other Epicor software or third party products may require the purchase of licenses for such other products. Where any software is expressed to be compliant with local laws or requirements in this document, such compliance is not a warranty and is based solely on Epicor's current understanding of such laws and requirements. All laws and requirements are subject to varying interpretations as well as to change and accordingly Epicor cannot guarantee that the software will be compliant and up to date with such changes. All statements of platform and product compatibility in this document shall be considered individually in relation to the products referred to in the relevant statement, i.e., where any Epicor software is stated to be compatible with one product and also stated to be compatible with another product, it should not be interpreted that such Epicor software is compatible with both of the products running at the same time on the same platform or environment. Additionally platform or product compatibility may require the application of Epicor or third-party updates, patches and/or service packs and Epicor has no responsibility for compatibility issues which may be caused by updates, patches and/or service packs released by third parties after the date of publication of this document. Epicor is a registered trademark and/or trademark of Epicor Software Corporation in the United States, certain other countries and/or the EU. All other trademarks mentioned are the property of their respective owners. Copyright 2017 Epicor Software Corporation Epicor. All rights reserved. No part of this publication may be reproduced in any form without the prior written consent of Epicor Software Corporation. - 2 -
Table of Contents 1 Avalara Tax Connect Overview 4 How It Works 4 Address Validation 4 Item-Level Taxation 5 Will Call 5 Taxing Freight 5 Managing Exemptions 6 Using Backup Tax 7 Region-Specific Functionality 7 Walkthroughs 8 Calculating Tax 8 Using Avalara Class Types 8 Posting to GL Accounts 11 Overriding Defaults in Transactions 12 Displaying Tax Jurisdictions in Transactions 13 Setting Up Backup Tax 14 Credit and Rebill 15 Exporting to Avalara 15 Setup 16 Licensing the Avalara Integration 16 Setting Up Avalara 16 Installing the Avalara Integration 17 Setting Up Prophet 21 17 Enabling Avalara for Your Company 23 Setting Up Items 24 Setting Up Locations 25 Setting Up Ship Tos/Customers 25 Setting Up Freight Tax Classes 26-3 -
1 Avalara Tax Connect Overview Avalara is a tax management application which handles taxation independently of Prophet 21. Tax Connect provides an integration of Avalara and Prophet 21 that eliminates the need to use the tax structure in Prophet 21. Avalara oversees all of the details involved in taxation including calculations, jurisdictions, customer and item exemptions, tax group rules, and tax corrections. IMPORTANT! When upgrading to Prophet 21 version 2017, you must first upgrade your Alavara version. How It Works Enabling and setting up Tax Connect (see the Setup segment of this manual for more details on setting up Avalara) involves feeding information into a few key areas in the system. Part of the setup process establishes communication between Prophet 21and Avalara, and the remainder of setup determines the information that is sent between the system and Avalara in order to produce accurate tax amounts for transactions. After Tax Connect setup, there isn't much else you need to do concerning taxes in the system. During transactions like order entry, Tax Connect retrieves the appropriate tax rates based on address, customer, and item information. This section details the internal processes that Tax Connect uses to handle the different aspects involved in taxing transactions. Address Validation Tax Connect functionality is based on an address validation service that runs behind the scenes in transactions. Avalara uses verified customer and ship to addresses to determine tax jurisdictions for transactions. Address validation settings are available in System Settings in the Address Validation Behavior field. - 4 -
NOTE: Enabling Avalara Tax Connect turns on address validation for every address field in the system, including in areas that have nothing to do with taxes. You should be aware that Avalara charges a small, per-transaction fee for each address validated. Options in the Address Validation Behavior setting in System Settings allows you to control when Tax Connect makes validation requests. Modify this setting to minimize costs associated with address validation. For taxation purposes, the entire address is validated, since tax jurisdictions can differ between one street and the next if they belong in different postal codes. When validation is set to Automatically Validate, a request is sent to Avalara immediately upon tabbing off of the last address field. Item-Level Taxation Taxes are also determined at the item level. When Prophet 21 makes a tax request, it sends item information to Avalara, which returns the taxes for each item on the order. The invoice shows itemized taxes broken down by jurisdiction, by jurisdiction level (local, state, national), or within one general tax bucket, depending on the preference you choose in System Settings. Will Call For front counter and will call sales, where customers pick up their orders, Prophet 21 uses the sales location address as the "ship to" address to calculate taxes. Taxing Freight Similar to taxing based on a customer tax class or an item tax class, applying tax to freight charges involves setting up item tax classes for your freight and applying them to a freight code or carrier that is added to a transaction. When a tax request goes out to Avalara, incoming and outgoing freight amounts are also sent as item lines with item tax codes for each type of freight being charged. The assigned freight item tax classes are sent along with the request to enable Avalara to assign tax properly. - 5 -
Managing Exemptions Navigation Paths: Setup > System Setup > System > System Settings > System Setup > Third Party Tax > Get Exemption No From Setup > System Setup > System > System Settings > System Setup > Third Party Tax > Send As CustomerCode You can manage exemptions in Avalara or in Prophet 21. The Get Exemption No From option in System Settings tells Tax Connect where to look for exemptions stored in Prophet 21. To allow Avalara to manage exemptions, do not add any exemption numbers in Prophet 21. Avalara matches exemptions with a customer or ship to during a transaction using the assigned customer code. Single Use Exemptions In some cases, distributors need to tax one or more orders based on a single use exemption. For example, a customer may have a tax exempt certification for a specific job, such as a hospital renovation project or electrical fixtures for a new public school. To accommodate these single use exemptions, the Avalara tax calls include customer PO numbers from transactions. Avalara then matches the PO number with a single use exemption code and applies the correct tax rule to the order on invoice. Avalara tax call modifications to include the PO number affect the following windows in Prophet 21: Order Entry/Front Counter Shipping Direct Ship Confirmation RMA Entry RMA Receipt Credit and Rebill Backup Tax Reconciliation B2B Seller Components Sales Order Imports Invoice Entry by Item Shipping Confirmation Import Direct Ship Confirmation Import RMA Receipt Import - 6 -
Invoice Entry by Item Service Order Entry Note: If Prophet 21 is configured to append any additional values to the customer PO number, you must first scrub those values before sending the customer PO number to Avalara. Using Backup Tax Tax Connect provides an optional Use Backup/Failsafe Taxation option which defaults all taxes to a Backup Tax Percentage when Prophet 21 cannot connect to Avalara, or Avalara cannot validate addresses. See Setting Up Backup Tax in the Walkthroughs section for more information on using this option. Region-Specific Functionality Currently, Tax Connect is not setup for use with Prophet 21 region-specific functionality. If your company is setup to use this functionality, third party tax functionality cannot be enabled. Regional functionality is enabled if the Regional Options setting in Company Maintenance is set to an option other than default for your company. - 7 -
Walkthroughs This section details the instructions for using Avalara Integration in transactions. Calculating Tax During order entry, the system makes a call to Avalara for tax calculations once you have entered a quantity for at least one item, and then do one of the following: click the Remittances, Totals, or Avalara Tax tab, or click Save. Using Avalara Class Types Navigation Paths: Inventory >Inventory Management > Maintenance > Item Maintenance > Classes tab > Avalara Tax Code Class Setup > System Setup > Maintenance > Class Maintenance Accounting > Accounts Receivable > Maintenance > Ship To Maintenance > Tax tab > Customer Tax Class Accounting > Accounts Receivable > Maintenance > Customer Maintenance > Tax tab > Customer Tax Class Customer Tax Class (Intended Use) The Customer Tax Class was added to accommodate Avalara. Depending on the jurisdiction, an item can be taxed differently based on the reason for its purchase. For example, a reseller typically is not charged sales tax unless the purchase is for equipment he is using rather than reselling. This customer type distinction is defined using the customer tax code class type. Tax Connect sends the class ID to Avalara where it is matched to a corresponding usage tax code to determine taxes. Create a new class in Class Maintenance. Assign Customer Tax Code as its Class Type.You can then set this as the Customer Tax Class on the Tax tab in Customer Maintenance and Ship To Maintenance. - 8 -
The table below shows the standard values for this class type. Code: A B C D E F G H I J K L Value: Federal Government State/Local Govt. Tribal Government Foreign Diplomat Charitable Organization Religious/Education Resale Agricultural Prod/Mfg. Industrial Prod/Mfg. Direct Pay Permit Direct Mail Other - 9 -
Item Tax Class Item Tax Class is another class added to accommodate Avalara. Tax Connect sends the class ID to Avalara which matches it to existing item tax codes to determine taxes. Create a new class in Class Maintenance, and assign Item Tax Code as its Class Type. The class description is used only within Prophet 21 and not seen by Avalara. You can then assign an item to the tax class in the Avalara Tax Code Class field on the Classes tab in Item Maintenance. Tax Connect sends the class ID to Avalara where it is matched to a corresponding item tax code to determine taxes. Freight Tax Class Once you have created the freight item tax classes, you can assign them to the Incoming Tax Code and Outgoing Tax Code fields found in Freight Code Maintenance or Carrier Maintenance. If your system is set up to tax freight by carrier, ensure that each carrier has been assigned to a freight item tax class for outgoing and incoming freight in Carrier Maintenance. However, if your system is set up to tax freight by freight code, you need to assign the freight item tax class outgoing and incoming freight to freight codes in Freight Code Maintenance rather than in Carrier Maintenance. Note: If the system is set up to tax freight by carrier, the Incoming Tax Code and Outgoing Tax Code fields will not appear in Freight Code Maintenance. The opposite is true if the system is set up to tax freight by freight code. (Incoming Tax Code and Outgoing Tax Code will not be visible in Carrier Maintenance.) This is designed to avoid the confusion of assigning freight tax class to both areas. - 10 -
Posting to GL Accounts Navigation Paths: Setup > System Setup > System Settings > System Setup > Third Party Tax > Get GL Account from Accounting > Accounts Receivable > Maintenance > Customer Maintenance > Tax tab > Sales Tax Payable Account Accounting > Accounts Receivable > Maintenance > Ship To Maintenance > Tax tab > Sales Tax Payable Account Inventory > Inventory Management > System > Location Maintenance > Location tab > Sales Tax Payable GL Setup > System > Company Maintenance > Accounts Receivable tab > Default Sales Tax Payable Account Typically, Prophet 21 posts taxes to a GL account that is specific to sales jurisdiction. In the case that you are using a third party tax application, the system does not have access to jurisdiction - 11 -
information which determines what GL accounts to post to. As a solution, the system posts taxes to one GL account which you assign using the Get GL Account From option in System Settings. Get GL Account from Get GL Account From tells the system where to look to post taxes. This field offers three options: Customer/Ship To for shipped orders, Sales Location for Front Counter orders - For shipped orders, this option looks to the customer address, then its ship to address for the GL account. For front counter orders, the sales location is used. Sales Location for all orders - This option defaults all tax posts to the Sales Location GL account for all methods of sale. Company account by state - With this option, you can set up a list of states in Company Maintenance, and the tax accounts to which taxes on transactions in each state should post. Default Sales Tax Payable Account You can assign a Default Sales Tax Payable Account in the Company Maintenance window that serves as a default GL account when one is not listed in the customer, ship to, or sales location. Overriding Defaults in Transactions Once you set up Tax Connect defaults, taxation occurs seamlessly and automatically. However, you can override tax defaults during order entry on the Avalara Tax tab. You can modify the customer tax class and apply or override an exemption. - 12 -
Field: Customer Tax Class Exemption No. Taxation Options Description: Modify the customer tax class for the current transaction; dropdown options include customer tax classes you have added. Use this option to allow a customer class to be non-taxable in certain transactions. Completing this field applies an exemption to a transaction. Use this option if you are managing exemptions in Prophet 21, or if exemption information for this customer, which would apply to the current transaction, has not been yet been added to Avalara. Options are: Default (Avalara determines taxation) - This option uses the settings and exemptions that you set up and applies them to the current transaction Force Taxable (override Avalara exemptions) - Use this option to tax a transaction for a typically non-taxable customer. For example, a reseller who is typically tax-exempt, but purchasing material for their own use should be taxed for that transaction. Displaying Tax Jurisdictions in Transactions An Avalara Tax tab in the transaction line level displays the jurisdictions that Avalara has assigned to items on the order. - 13 -
Setting Up Backup Tax Navigation Paths: Inventory > Inventory Management > System > Location Maintenance > Backup Tax Percentage To use backup taxation, assign a Backup Tax Percentage in Location Maintenance. The system applies this percentage to transactions processed during an interrupted web service event when the system is unable to call out to Avalara. NOTE: If backup taxation is disabled, you cannot create new invoices until a connection is restored. Bulk Invoice Tax Submissions Navigation Path: Accounting > Accounts Receivable > System > Failsafe Tax Invoice Reconciliation The Failsafe Tax Invoice Reconciliation window logs transactions that have been assigned the backup tax percentage. Check the Reconcile check box for invoices you want to reconcile. All checked invoices are sent in bulk to Avalara and given new tax amounts. - 14 -
To send checked invoices, press Save. Unchecked invoices are not sent to Avalara. Avalara returns a memo amount (the difference between the backup tax amount and the corrected tax amount) and a third party tax amount (the new, invoiced tax total) for each reconciled transaction. Each memo amount also receives a memo number. Note: If a memo amount is $0, meaning actual tax equals backup tax, the system still creates a memo that shows the proper tax jurisdiction that has been applied. Credit and Rebill The system calls out to Avalara for credit and rebill tax corrections (similar to what happens during order entry). You can override defaults on the header-level Avalara Tax tab. An item-level Avalara Tax tab displays the jurisdictions applied in the current transaction. Make the desired corrections and then press Save. This retrieves new tax amounts which appear underneath the corrected line items. Note: As with credit and rebill when using standard Prophet 21taxation, the system cannot automatically apply credits to an invoice of any kind that has amounts paid towards it. This includes payment, term, memo, and bad debt amounts. As a workaround, Credit and Rebill can create a non-referencing credit and a new invoice. The non-referencing credit can then be manually applied to the original invoice or any open amount for the account. Rebill in Avalara Certain debit and credit memos cannot be created through Credit and Rebill. In these cases, use the credit and rebill functions in Avalara, using the entire transaction in order to calculate the correct taxes. Exporting to Avalara Avalara accepts XML files exported from Prophet 21. In this way, you can import customer information into Avalara. However, there is currently no way to export from Avalara to Prophet 21. - 15 -
Setup Enabling Avalara Tax Connect for Prophet 21is a multi-part process which involves: Running the Avalara Tax Connect licensing script, Staging your company's information in the Avatax application itself, Installing the Avalara Integration on each Prophet 21client PC, Configuring Prophet 21 system settings to use Avalara. This section details the steps for this setup process. Important! You should set up and test the Avalara integration in your play system before attempting to set it up in your live environment. Licensing the Avalara Integration After you purchased the Avalara Integration, you received an email with an attached script and instructions on how to run it. This script contains the license key to enable Avalara Integration in Prophet 21. Run the script against your Prophet 21 database using the instructions in the email that contains the script. Setting Up Avalara Perform these steps on the Avalara site for your organization. If you need help setting up Avalara, contact Avalara s customer service. 1. Setup your company (Organization > Company > Company Setup); the company code in Avalara should match your company ID in Prophet 21. 2. Setup operating locations for your company (Organization > Company > Locations). 3. Define valid taxing nexuses. (Organization > Nexus) For example, if your company pays Pennsylvania sales tax, your taxing nexus is Pennsylvania. 4. Enter applicable exemption certificates and item tax rules. Item-level exemptions can also be added here (Organization > Exemptions, Items). - 16 -
Installing the Avalara Integration You must install the Avalara Integration (which is available as a download from the Customer Website) on each client PC where Prophet 21 resides. NOTE: This includes the PC or server where you are running the Scheduled Import Service Manager. NOTE: If you are a self-hosted B2B Seller customer, you will need to install the Avalara Integration onto your Jaguar Server that runs the Prophet 21 components in order for taxes to be reflected correctly on your B2B Seller web site. 1. Find the installer in the File Center under Downloads > 12.x Downloads > Additional Downloads and Updates > Avalara. 2. Unzip and run the file named AvalaraIntegrationSetup.zip 3. Follow the prompts for the installation wizard to complete setup. The installation is very simple. After completing the setup steps, your PC is ready to use Avalara. NOTE: Avalara must be installed to a location that is accessible to Prophet 21. Setting Up Prophet 21 Navigation Path: Setup > System Setup > System > System Settings > System Setup > Third Party Tax Before performing the following modifications to System Settings, you need to have purchased and applied the access key to enable Avalara Tax Connect. The Third Party Tax screen in System Set- - 17 -
tings contains fields that require certain information in order to establish a connection with Avalara and to customize system behavior. NOTE: Epicor strongly recommends setting up a play environment to test Avalara integration before installing it to your production environment. 1. Check the Avalara Tax Integration Enabled check box to enable Tax Connect in the system. 2. Enter Login Settings to initiate a connection between Tax Connect and Avalara. Avalara provides the login settings for you to connect. 3. Test the connection settings by clicking Test Connection to ensure a successful connection to Avalara was established. 4. Set system behavior in the remaining fields. Options are detailed in the table below. 5. Save your settings and restart the system for the changes to take place. Field: Avalara Tax Integration Enabled Webserver Path Webserver Login Webserver Password Test Connection Description: Enables Avalara features in the system URL for web service connection to Avalara; this is the account number provided by Avalara. Login for web service connection to Avalara; this is the license key provided by Avalara. Password for web service connection to Avalara; provided by Avalara. Tests the connection to Avalara based on the Login Settings entered - 18 -
Get GL Account from Field: Description: Tells the system where to look for the GL account for recording taxes; options are: Company account by state - For each transaction, the system matches the state of the ship to (or, for front counter / will call transactions, the state of the sales location) to a list of states you set up in Company Maintenance. Each state has a sales tax account specified. Note that you must enter a state value for every state to which you pay tax. Customer/Ship To for shipped orders, sales location for front counter orders - For each shipped transaction, the system looks at the sales tax account specified on the ship to level. If it s not found, it looks at the sales tax account specified on the customer level. For each front counter / will call transaction, the system looks at the sales tax account on the sales location. Sales location for all orders - The system posts the tax amounts to the sales tax account on the sales location for all transactions. If any of these methods do not find a sales tax account, the system reverts to the sales tax account specified at the company level (in Company Maintenance on the Accounts Receivable tab). - 19 -
Field: Get Exemption No from Create tax lines on invoice for Description: Tells the system where to look for the exemption number; options are: State Sales Tax Exemption Number State Excise Tax Exemption Number Federal Excise Tax Exemption Number Other Exemption Number This setting is useful if you want to maintain tax exemption information in Prophet 21 instead of Avalara. In some cases, one of the tax exemption number fields may be used for another purpose, so you can select which field is used for Avalara. Determines how tax lines appear on invoices; options are: Each unique Jurisdiction Level (city, state, etc.) A tax line gets created for each jurisdiction ID returned by Avalara. City and state taxes will be separate lines, but if there are two different city taxes, they are totaled into one generically-named tax line; e.g., TAX-CITY or TAX-STATE Each unique Jurisdiction/Tax ID (specific taxes by description) Each jurisdiction ID gets its own tax line; each tax line is labeled with the jurisdiction to which tax is paid; e.g., TAX-PA STATE SALES Single line for total tax All taxes appear as one generic tax line that displays simply as TAX. - 20 -
Field: Send as Customer Code Address Validation Behavior Description: Sets the type of ID to use when contacting Avalara for customer exemptions; options are: Customer ID Ship To ID The selected option must match the option designated in Avalara. Tells the system when to validate addresses; options are: Prompt for validation - when you click off of an address field to a nonaddress field, the system prompts to ask if you want to validate the address. Automatic validation - when you click off of an address field to a nonaddress field, the system automatically validates the address. Manual validation (right mouse click) only - The system only validates an address if you specifically request a validation using the right mouse button menu. Important! Address validation works for all address fields in Prophet 21, including vendors, contacts, and other addresses not normally used with taxes. Avalara charges for each address validation you perform, so be very careful with this setting; if addresses are set to automatically validate, you will likely be sending many unnecessary validations to Avalara. - 21 -
Field: Countries allowed (comma list) Description: This free-form field allows you to enter the countries for which you want to validate addresses. Because Avalara currently validates addresses for the U.S. and Canada only, Avalara requires a built-in function to limit validation of addresses to selected countries. Enter countries, delimited with commas, as they would appear in addresses. Include any variations of the country that users may enter; e.g., US vs USA. Here are some possible scenarios concerning this setting and country fields and how the system behaves in each case: If this setting is left blank, the system assumes you can validate all addresses. If countries have been listed, and the country field in an address is blank, the system assumes the address can be validated. If countries have been listed, but the country entered in an address field does not match countries listed, automatic validation does not occur and the RMB address validation option is not available. NOTE: CA and US are required countries and must be listed in the Countries Allowed field. - 22 -
Field: Use Backup/Failsafe Taxation Reconciliation Memo Batch No Get Freight Tax Code from Description: When enabled, the system uses backup tax settings which you defined when it cannot communicate with Avalara. The backup tax is a tax percent specified on the sales location that is charged as tax. When connection to Avalara has been restored, you can submit all the invoices you transacted to Avalara in bulk, get the correct taxes back, and make any credits or debits necessary in Prophet 21. If this setting is not enabled, you will be unable to invoice transactions until connectivity with Avalara is restored. Assigned to memos created in the Failsafe Invoice Reconciliation window to allow easy identification for printing or reporting purposes Determines the method used to tax freight; default is Freight Code. Options are: Freight Code - Uses the Avalara Incoming Tax Code and Avalara Outgoing Tax Code settings in Freight Code Maintenance to determine the tax codes to send to Avalara for tax on freight. Carrier - Uses Avalara Incoming Tax Code and Avalara Outgoing Tax Code settings in Carrier Maintenance to determine the tax codes to send to Avalara for tax on freight. The system defaults to this option when no values are given for incoming and outgoing taxes on freight codes. Enabling Avalara for Your Company Navigation Path: Setup > System Setup > System > Company Maintenance > Company tab > Avalara Enabled - 23 -
Once you enable Avalara at the system level, you need to enable it on the company level. Check the Avalara Enabled check box in Company Maintenance on the Company tab. Also in Company Maintenance, you must set up the Default Sales Tax Payable Account on the Accounts Receivable tab. This account is the backup GL account to which the system posts taxes if it cannot find any other GL account. Setting Up Items Navigation Paths: Setup > System Setup > Maintenance > Class Maintenance Inventory > Inventory Management > Maintenance > Item Maintenance Inventory > Inventory Management > Maintenance > Item Fast Edit Inventory > Pricing Service > Maintenance > Pricing Service Template Maintenance To correctly calculate tax, Avalara needs to know what items are on a transaction, as different types of items are subject to different taxes from jurisdiction to jurisdiction. Rather than setting up all of your items in Avalara, you can set up item tax codes that tell Avalara what kind of item each line on the transaction is. Avalara then uses this information to find the appropriate taxes for each item type. Note: Any items for which you do not specify an item tax code are treated as a default item type in Avalara which is taxable. First, create the item tax codes using these steps: 1. Open Class Maintenance. 2. Enter a desired class ID. The ID should match codes set up in Avalara. 3. Select Item Tax Code as the class type. - 24 -
4. Enter any class number you want (the system does not use this). 5. Enter an appropriate class description. 6. Save the record. Next, assign an item tax code to each item. Note that you can set up item tax codes using Item Fast Edit and Pricing Service as well as Item Maintenance. 1. Open Item Maintenance. 2. On the Classes tab, select the item tax code you want to use for the item from the Avalara Tax Code Class field. 3. Save the record. Setting Up Locations There are two settings you need to modify in Location Maintenance if you have chosen a setting that uses location GL accounts, or if you are using backup taxation. Sales Tax Payable GL The sales tax payable account to which sales taxes post if they are posting at the location level. You do not need to set up this field if you are using Company Account by State as your Get GL Account From option in System Settings. Backup Tax Percentage The percentage the system places on a transaction by default if Avalara cannot return a tax value. This value is expressed as a percentage, so entering 10.00 is 10%. In addition, if you need to support the use of multiple tax identification numbers under one Company ID code, you can setup each location with a unique tax company code. A tax company code is used in Prophet 21 and Avalara to associate a company sales location with the tax identification number. The tax company code is sent to the Avalara Tax Connect system and allows the system to properly record the tax liabilities for each location. To accomplish the correct tax liability for each location, find the tax company code in Location Maintenance, labeled Avalara Company Code. You can enter an alphanumeric value that is passed to Avalara as the company code for transactions at the sales location. Note: For the Invoice Entry by Item window, since there is no sales location on the transaction, the logged-in user s default location ID is used to get the Avalara Company Code. Setting Up Ship Tos/Customers To calculate tax correctly, Avalara needs to know what type of customer or ship to you are shipping material to, as each jurisdiction may have different taxes for different types of customers. First, create the customer tax codes using the following instructions. - 25 -
1. Open Class Maintenance. 2. Enter the desired class ID. The ID should match codes in Avalara for customer usage type. 3. Select Customer Tax Code as the class type. 4. Enter the desired class number (the system does not use this). 5. Enter an appropriate class description. 6. Save the record. Next, assign a customer tax code to each ship to or customer as desired. Note that you can set up customer tax codes using Customer and Ship To Fast Edit as well as Customer and Ship To Maintenance. Note: The following instructions only describe Customer Maintenance, but the process is identical for setting up the code in Ship To Maintenance. If, in a transaction, there is no customer tax code set up at the ship to level, the system uses the customer tax code provided at the customer level. 1. Open Customer Maintenance. 2. On the Tax tab, select the desired customer tax code for the customer from the Customer Tax Class drop-down field. 3. Save the record. Additionally, you should set up the Sales Tax Payable Account on the customer and / or ship to record if you have the system set to record taxes in the GL accounts by customer / ship to. Setting Up Freight Tax Classes Navigation Path: Setup > System Setup > Maintenance > Class Maintenance In order to apply tax to freight, set up at least one item tax class each for incoming freight and outgoing freight (see Setting Up Items above for information on how to create item tax classes). These classes are assigned to a freight code or a carrier depending on which you set up to use for taxing freight. Set up freight tax classes in Class Maintenance. - 26 -