PURCHASING > Master Files > Tax Categories/exceptions > Add/modify/delete
If your organization has cost centers in multiple states or provinces AND you are defaulting taxes on POs and other documents based on the selected cost center, you can use Tax Categories (exceptions) to further refine how taxes default for certain types of items (most commonly items that are tax exempt in certain jurisdictions).
Tax Categories allow you to establish tax rules based on a combination of the cost center (destination) and the type of item being purchased. For example, safety supplies might be taxable in California but tax exempt in New York (this example is for illustration only).
Why only for multi-state/province organizations?
Other ways to populate the Tax Category Master File
How to Use This Feature
Tax rules are most commonly applied to an entire category of goods or services by a government’s tax agency, rather than specific items. For example, all “safety supplies” might be tax exempt in some jurisdictions.
However, not all jurisdictions have the same rules for a particular category of items. For example, safety supplies might be taxable in California but tax exempt in New York.
For each Tax Category, you can establish an unlimited number of “tax overrides”, that is, you can specify one or more “standard” tax codes and then the “alternate” (replacement, override) tax code to use instead, whenever the original tax code is encountered.
You can then assign the Tax Category to one or more items in the Item Master File.
For example, if safety supplies are tax exempt in New York and Ontario but taxable in all other states/provinces that you do business in, you could set up a Tax Category called “Safety” with two rules/exceptions (one for NY taxes and one for ON taxes).
Then, when determining which tax codes to default on POs and other documents, whenever a “safety” item is being purchased and the applicable cost center has NY or ON default taxes, SpendMap will override the taxes with a tax code representing 0% taxes (tax exempt).
Tax Category/Exception Master File Screen
This screen lists one or more tax exceptions for the Tax Category.
The column on the left (“Standard Tax”) shows the original/standard taxes that would normally apply (typically based on the selected cost center for the transaction) and the column on the right (“Alternate Tax”) shows the tax code that SpendMap will substitute in for the standard tax code when items in this Category are being purchased.
You can enter as many exceptions/rules as needed for each Tax Category.
