Happy April! It's Tax Season...
Given the time of year, it seems fitting to talk about tax; sales tax, specifically. If you don't ship taxable items, you don’t need to charge and collect sales tax. But if you do, you likely appreciate its complexity.
Sales tax rates vary by state, county, and even city or district. Each locality can have its own rules, exemptions, and rates. To further complicate things, sales tax laws are in a constant state of flux: between July 2022 and June 2023, there were 686 sales tax changes across various jurisdictions!
PowerShift offers several options to accommodate your sales tax collection and reporting requirements:
- Interfacing to Avalara AvaTax, an online service that automates tax calculation and reporting.
- Importing third-party sales tax tables into PowerShift on a regular basis.
- Maintaining tax codes internally.
Interfacing to Avalara
If collecting sales tax is a big part of your business or you need more automation in filing returns and managing exemption certificates, PowerShift's interface to Avalara could be the ideal solution:
- PowerShift interfaces to Avalara AvaTax for calculating sales tax.
- Resale licenses can be stored in Avalara.
- Avalara has different package options, some of which include filing.
- Detailed sales tax reports come from Avalara.
- PowerShift’s Sales Tax Report (AVTAX) summarizes taxable and exempt amounts by invoice.
Importing Sales Tax Tables
If you ship taxable goods to multiple jurisdictions, importing tax tables on a regular basis could be the right solution. Tax tables are zip code-based; they are typically updated monthly.
- PowerShift supports the following:
- Sales Tax Systems Silver+ Edition
- Sales Tax Systems Zip+4+ Diamond Edition
- Zip2Tax CSV
- The TIP (Import Sales Tax Tables) program imports tax tables to the PowerShift database.
- States that you report sales tax for are flagged for tax by zip code in State Descriptions Maintenance (TSM).
- For customers and ship-to addresses in “tax by zip code” states, you’ll need to make sure the tax code in master files is updated with the appropriate zip code.
- When an order is entered, the tax code on the sales order defaults to the ship-to zip code on the order if the state is one flagged to do so.
- Resale licenses can be assigned by customer, ship-to, customer/state and order (defaults on entry but can be changed).
- Reports include:
- RTX: Monthly Sales Tax Summary Report
- RTXI: Sales Tax Detail Report
- OTX: Sales Order Tax Report
- Options provide reports by tax authority, date, organization, state/province and in different currencies.
Maintaining Tax Codes Internally
Finally, if you don't ship taxable goods or if you only have to collect sales tax for a handful of jurisdications, the best solution for your business might be to maintain your own tables of tax authorities and tax codes.
- Tax Authority Maintenance (TAM) maintains sales tax authorities and the rate levied by each. Tax authorities are the building blocks of tax codes.
- Tax Code Maintenance (TCM) maintains tax codes that are made up of up to 10 tax authorities. The sum of its authorities’ tax rates is the sales tax percentage for a given tax code. Sales tax is collected based on the tax code and is subsequently distributed to each authority.
- Tax codes are assigned to customers, ship-to addresses, and orders (defaults on entry but can be changed).
- Resale licenses can be assigned by customer, ship-to, customer/state and order (defaults on entry but can be changed).
- Reports include:
- RTX: Monthly Sales Tax Summary Report
- RTXI: Sales Tax Detail Report
- OTX: Sales Order Tax Report
- Options provide reports by tax authority, date, organization, state/province; currency can be specified when reporting for different countries.
If you have questions about how PowerShift can best address your sales tax collection and reporting requirements, contact helpdesk.
