Tax Defaults and Rules Payables Options

Use this region to set a hierarchy for Payables to use when it provides default values for Tax Code fields. Payables searches the sources you enable, in the order you designate until it finds a valid active Tax Code value (tax code or tax group). When it finds a tax value, it stops searching and defaults the tax value to the document you are creating.

Enable each source you want to use by checking its check box. For each source, enter a rank (1 is searched first), and give each source a unique, consecutive number starting with 1.
Note: Two Payables options supersede the hierarchy you define. If you enable the Enforce Tax from Purchase Order option, Payables always searches first at the Purchase Order Level for purchase order matched documents. If you enable the Enforce Tax From Account option, Payables always searches next at the Natural Account. If the invoice is not purchase order matched or if you have not enabled the Enforce Tax from Purchase Order option, Payables checks the Natural Account first.

Enforce Tax From Account : Enable this option if you want to enforce the relationship between the tax code and the expense or asset account for distributions. If the following conditions are true then Invoice Validation checks that for every account to which you have assigned a tax code, that the tax code matches:

•  You have enabled the Enforce Tax From Account option.
•  You have assigned tax codes to accounts in the Tax Options window in General Ledger.
•  You have disabled the Allow Tax Code Override option in the Tax Options window in General Ledger.

If the tax code does not match the account then Invoice Validation will place the invoice on Natural Account Tax hold.
If you enable the Enforce Tax From Account option, then during Expense Report Import and Payables Open Interface Import the system checks the tax codes of all accounts that have tax codes assigned to them. If the tax code is incorrect, Payables will not import the invoice or expense report and will list it as an exception.

If you enable this option we recommend that you rank Account at or near the top of your source hierarchy to minimize holds.

Enforce Tax From Purchase Order :Enable this option if you want Payables to honor the Taxable flag on the purchase order shipment, and if you want Invoice Validation to verify that the invoice Tax Code value matches the Tax Code value on the purchase order document that the invoice is matched to. If this option is enabled, the system looks at the Taxable flag on the purchase order shipment during matching. If the shipment is nontaxable, then the system does not use your Tax Code Defaults hierarchy, and enters no Tax Code value on the invoice distribution. If the purchase order shipment is taxable, then the system defaults the Tax Code value from the shipment, regardless of the rank you assign to the PO for Matched Invoices source in your Tax Code Defaults hierarchy.

If this option is not enabled, then even though the purchase order shipment is nontaxable, the system continues searching in your Tax Code Defaults hierarchy if it finds no Tax Code value on the purchase order shipment.
If the purchase order shipment to which you matched is defined in Purchasing as taxable, and the Tax Code values on the invoice and the purchase order are not the same, then Invoice Validation automatically applies a Tax Difference hold to the invoice. Invoice Validation also applies a Tax Difference hold to an invoice if the invoice and purchase order Tax Code values are the same and the purchase order shipment to which you matched is non–taxable. Payables releases the hold when
you submit Invoice Validation after correcting the Tax Code on the invoice or on the purchase order you matched to. You can also manually release a Tax Difference hold in the Holds window and the Invoice Actions window.
Note: If you enable this option we recommend that you do not also enable the Enforce Tax From Account Payables option in the Tax Defaults and Rules tabbed region.

Invoice Tax Payables Options

 

Require Tax Entry at Header. If you enable this option, Payables requires you to enter a Tax Code and Tax Amount in the Invoices window when you enter an invoice. This option does not apply to any imported invoices or to credit and debit memos that are entered in the Invoice Workbench. If you use Automatic Tax Calculation at the Header level, Payables automatically calculates a Tax Amount. You are required to enter a value for a Tax Code field only if one has not defaulted from a source designated in your tax hierarchy.

If you have enabled this option and the invoice has no tax, in the Invoices window you enter a tax code with a zero-percent tax rate assigned to it. If you enter a Tax Code and Tax Amount for an invoice, or if your system is set up with a Tax Code default and an automatically calculated Tax Amount, then Payables creates a tax distribution. You can adjust the tax distribution in the Distributions window.

You cannot enable this option if you select Line or Tax Code as your Calculation Level Payables option. If you allow override of the tax calculation level and you enter an invoice using Line or Tax Code level calculation, Payables will not require you to enter a Tax Code or Tax Amount in the Invoices window even if you have enabled the Require Tax Entry at Header option.

Do not enable this option if you want to enter Use type tax codes on invoices. If you enable this option, Payables prevents you from entering Use tax codes on invoices. In addition, when you enable this option and enter a Use type tax code as the default tax code for a supplier site, Payables does not assign the default to the invoices you enter for the supplier site.

You may not want to enable this option if you want to allocate tax across selected invoice distributions.

If the Require Tax Entry at Header Payables option is disabled when you enter an invoice, then the Tax Code and Tax Amount fields are optional.

Note that if you enable this option and if you process expense reports in Payables, then the Expense Report Import program rejects any expense reports that do not have at least one tax line. If an expense report has no tax, you can enter a zero amount line with a zero rate tax.

Use Automatic Tax Calculation. Select this option if you want to enable Payables to automatically calculate and enter tax on invoices. If this option is not enabled, Payables will disable Automatic Tax Calculation options throughout the system. If you disable this option after you have enabled it, Payables will not automatically calculate sales tax for any invoice entered after you disable the option.

If you want to use Automatic Tax Calculation for some invoices, and you also want to create tax distributions for other invoices by manually entering tax distributions, by allocating tax across selected invoice distributions, or by matching to purchase orders, then enable this option. You can selectively disable Automatic Tax Calculation for a particular supplier, supplier site, or invoice. See: Disabling Automatic Tax Calculation.

If you do not enable this option, Payables does no tax calculation but will automatically create a tax distribution if you enter values for Tax Code and Tax Amount in the Invoices window. Payables copies the invoice tax code and tax amount values to the new tax distribution but does no tax calculation.

Calculation Level. If you enable the Use Automatic Tax Calculation option, select the level at which you want Payables to automatically calculate sales tax. This value defaults to new suppliers you enter.
Automatically create tax distributions based on the Invoice Amount and Tax Code in the Invoices window:

• Header. Automatically create tax distributions based on the Invoice Amount and Tax Code in the Invoices window:
• Tax Code. Automatically create tax distributions based on the distribution Amount, Tax Code, and Includes Tax check box in the Distributions window. When calculating tax amounts, group lines with the same tax code and Includes Tax check box setting together, calculate tax, and then round the tax amount.
• Line. Automatically create tax distributions based on the distribution Amount, Tax Code, and Includes Tax check box in the Distributions window. When calculating tax amounts, calculate tax for each distribution, round the tax amount, then add the tax amounts. Allow Calculation Level Override. Enable this option if you want to allow users to adjust the default value of the Calculation Level option for new and existing suppliers.

The Calculation Level defaults in the following order: Payables Options -> Suppliers -> Supplier Site -> Invoices. You can adjust the default calculation level in the Supplier, Supplier Sites, and Invoices windows only if the Allow Override option is currently enabled in the previous window. You can enable the Allow Calculation Level override check box in the Suppliers window for new and existing suppliers only if the Allow Calculation Level Override check box in the Payables Options window is currently enabled.

Distribution Amounts Include Tax. Enable this option if you use Automatic Tax Calculation at the Line level or Tax Code level, and you want the Distribution Amounts Includes Tax check box to be enabled by default for all new suppliers you enter.

When the Distribution Amount Includes Tax check box is enabled at the supplier site, Payables subtracts the calculated tax from non-Tax (Item, Misc, Freight, Prepayment type) distributions when Payables automatically creates tax distributions. When you select this option at the supplier site, Payables always checks the Includes Tax check box for invoice distributions and recurring invoice templates.

You cannot enable this option unless you enable Automatic Tax Calculation and you select Line or Tax Code as your Calculation Level.
This value defaults to the Distribution Amounts Include Tax option in the Suppliers window, and you can change it in the Suppliers window if you enable the following option, Allow Override.

Allow Override. If you enable the Allow Override option, you can override the Distribution Amounts Include Tax check box default value for all suppliers.
If you enable this option you can also adjust the Includes Tax check boxes in the Expense Report Templates window.
Note that if you enable Header as the Calculation Level Payables option, then you cannot enable this option. Therefore you can never enable the Includes Tax check box in any of the following windows: Distributions, Invoice Gateway, Expense Report Templates.