Sales Tax Codes

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Pro: If you have multiple stores, sales tax codes must be set up at Headquarters.

Sales tax codes identify the specific taxing instructions for sales of the inventory items to which they are assigned. Once you have defined your tax codes, you assign them to your inventory items so the correct tax is collected. If all the items in a department are taxed the same, associate a tax code with the department record and all new items added to the department will automatically be assigned this tax code.

The simplest of tax structures might just include two sales tax codes: taxable and non-taxable. However, you may need to collect different tax rates for certain items, to tax items differently depending on their price, or collect and pay taxes to multiple agencies. In these cases, a separate tax code can be defined and then assigned to applicable items in inventory.

Sales tax codes are defined on the Sales Tax page of company preferences.

Using Tax Codes in Conjunction with Tax Locations

Tax locations can be used to have different taxing instructions for sales of the same items depending on the geographic location (e.g. out of state sales) or to meet special customer tax needs. Learn more.

Notes:

- In inventory, assign tax codes to your items based on the class of merchandise they fall in. Select the correct tax code from the drop-down list in the Tax Code field on the item record.

- If you use multiple tax locations, adding or deleting a tax code in one location adds or deletes that code in all locations. If the taxing instructions for a code are to be different in different locations, edit the tax code as appropriate for each affected location in company preferences. Editing a tax code in one location does not affect that tax code in other locations.

- If a tax code is no longer needed, it can be deleted. However, be aware that deleting a tax code from one tax location deletes it from all locations. If the deleted code is assigned to items in inventory, you will have to reassign those items to another tax code.

- When using price thresholds to determine if an item sale is taxable, you can also specify whether tax is applied to the entire item price, just the amount over the threshold, or just the amount within a price range.