Path: Organization > Lookups > Tax Rates
The Tax Rates Lookup window accommodates the definition of two tax rates to estimate taxes on Receivings and Sales. You can set a default tax rate to calculate total costs on the Purchase Order and the Purchase Requisition windows. The default Tax Rate will automatically populate on new POs and PRs, but it can be overwritten.
When the Tax Exempt Code field is populated, the ID prints at the bottom of each printed copy of a Purchase Requisition or Purchase Order. If a Tax Exempt Code rate is entered, Purchase Requisitions, Purchase Orders, and Sales Orders default to a non-taxable status.
Mark the Pass Thru Rate % to apply the indicated percentage to the unit cost of an item. In WebTMA Plus, this can also be applied to P-Card transactions and the Invoicing module. See About Pass Thru Tax below for more information.
If required, the second level tax (Tax 2 Section) can include the first level tax, i.e., when the Tax 2 on Tax 1 check box is marked, Tax 2 is applied to the sum of the purchase cost and the Tax 1 amount.
The Description field for both Tax 1 and Tax 2 is reflected on related Request for Quote, Receiving, and Sales Order windows. For example, if a Tax 1 description is State Tax, the estimated tax field labels will reflect Est. State Tax when that Tax Rate used.
The Accounts Section displays fields where the Account numbers reserved for Sales Tax can be linked to items that are taxed.
Mark the check boxes in the Taxable Items Section to specify the default item categories that are taxable when a given Tax Rate is used, such as Sales Order and Work Order Labor.
New Parts entered in WebTMA automatically default to a non-taxable status but the default can be changed on the Part record.
About Pass Thru Tax
If you mark the Pass Thru Tax Rate % check box, the tax is passed through to the unit cost of an item from the Purchase Order or P-Card transaction when the following conditions are met:
- The option is enabled in Client Info / Preferences–Materials Management Section (Include Pass Thru Tax in Unit Cost)
- The line item on the transaction is taxable
- The transaction has a Tax Rate specified
- The Tax Rate specified on the transaction has a value in the Pass Thru Rate % field
The Pass Thru Tax is applied to the average cost of a Part for stocked items or the unit cost for one-time purchases. The following specifies when the Pass Thru Tax is applied.
Purchase Orders
- Non-invoiced. Pass Thru Tax is applied during receiving.
- Invoiced (WebTMA Plus Only). Pass Thru Tax is applied when the invoice is matched.
P-Card Transactions (WebTMA Plus Only)
- Items purchased for Work Order or Sales Order. Pass Thru Tax is applied when the transaction is saved.
- Items purchased for stock. Pass Thru Tax is applied when the P-Card transaction is reconciled.
Items purchased for stock will include the amount of the Pass Thru tax in the Part record's average price. This statement applies if you use the Purchase Order or the P-Card transaction but not P-Card transaction items purchased for Work Orders or Sales Orders.
About Taxable Parts
When a Part is selected for Purchase Orders or Sales Orders, WebTMA looks to several records to determine the taxable status of the order.
WebTMA will mark the Taxable check box on the order only when all the following conditions are true:
- the Part is marked as taxable, i.e., the Tax Purchases or Tax Sales (for Sales Order) check box is checked on the Part record
- the Purchase Order or Sales Order check box is marked in the Taxable Items Section of the Tax Rates Lookup
- the Taxable check box is not marked on the related PO or Sales Order record
If the Part on a Purchase or Sales Order meets all the conditions listed, then WebTMA automatically marks it as taxable.
Transactions that do not apply to Purchases or Sales for Parts only use a taxable preference based on the Tax Rates Lookup window settings.