This guide will take you through the process of setting up your Organization to utilize the Tax Region Junction on a Tax Zone. This may not apply to your business model and should not be done lightly. Please check with your DealerTeam account rep and ensure you are pointed in the right direction. You also will need to clearly define what you expect the taxes to be set to and what special rules apply to each Zone you create. Lastly, you will need to make sure you and your team have access to all the fields referenced in this article.
There are three steps to setting up your Tax Zones, we will approach this step by step to reduce confusion:
- Setting up the Tax Region, this will include how to use the Min/Max functions on the Region and Rate Types.
- Setting up the Tax Zone.
- Assigning the Correct Regions to your Zone. This will include which Regions apply and how they overlap.
Setting up the Tax Region:
- Rate: This will be the rate at which this region accrues Tax, this will always need to be filled out with a value.
- Rate Type: This is critical, the rate type that you assign to the region will determine what types of Aftermarket Items or Vehicles on a Deal will Accrue tax under this region. Keep in mind that you will ultimately have more than one Rate type in each zone. The options are as follows:
- General: this will accrue Tax on Fees
- Labor: If Labor is sold on a Deal and the Equipment Card is marked Taxable.
- Part: this will show on any parts Sold on a Deal, can be turned off for individual cards via the Checkbox.
- Vehicle: This will Apply to any Vehicle retail Sale price on the Deal.
- Credit: this will be used to create a Trade In Tax Credit, This only works against the value of the trade-in vehicle as a negative Tax entry that needs to be recognized when your state allows for a Trade In Tax Credit. If you use the credit match the vehicle combined tax rate to the Credit rate. It should be a positive percentage.
- Region Code: This is the Human Readable text for this Region, This would be the City, State, or County name most commonly, or in the case of a Special or District tax it would be the description of that.
- Jurisdiction Type: This is the primary distinction of what the taxable Jurisdiction that will be owed the taxable amount collected, again it is a picklist:
- Max Taxable Amount: This will be the maximum value that this specific region would apply. Note that the Rate type will determine what is the primary driver of this value. Most common case for this would be to use Tiered tax on a Vehicle Sale.
- Max Tax Amount: This will be the maximum amount of Tax that can be applied to this Region. Again this will be most commonly used in a Tiered Tax situation. Again the rate type is the driver on what is taxed. If you plan to use this function you will need to have a value in both the Min taxable and Max taxable amounts filled in.
- Min Taxable Amount: Again this is most commonly used in a tiered tax setup. The other use case for this is if you plan to use the min or max tax fields this should be set to a value of at least .01.
- Min Tax Amount: This is used in Tax jurisdictions where there is a minimum collected fee up to a certain dollar amount, anything above that amount will assign up to the Max taxable amount.
Setting up the Tax Zone:
The Tax zone is the object that will be attached to the Deal. Remember if you are assigning it via an API make sure you update the API accordingly. There are the 9 major components to create the Tax Zone:
- State: (Required) This is the State Level Jurisdiction of the Zone.
- City: (Recommended) This is the City in which the transaction takes place.
- County: (Required) This is the County where the transaction takes place.
- Postal Code: (Recommended) This can be used in conjunction with the account to auto-assign Zones to the Deal.
- General Rate: If you do not intend to use the Junction Items, you can assign a generic rate that will apply uniformly here as we are going to be using the Junction object, Please make this Value 0 as it will be ignored by the system once you assign a Region to the Zone.
- Effective Date: You can use this to set a special rate for a period of time, or in conjunction with the Expires Date to obsolete Tax Zones once they are replaced.
- Expires Date: Similar to Effective Date. To be used to obsolete tax zones once they have been replaced. You will never have a need to delete a tax zone, just make it not effective via these fields.
- Special: If there is a Special tax rate (IE Rental addition or other), you can reference it here.
- District: This would commonly be for service districts or special fire or flood districts that charge an additional tax on sales.
When setting up your Regions remember that each taxable jurisdiction will need to be made for each Rate Type. For example, if there is a 5% Sales tax due on General, Vehicles, Parts, and Labor for your Zone you will need to create one at 5% for General, one at 5% for vehicles, one at 5% for parts and one for 5% for Labor. So four unique regions for this to work correctly.
Assigning the Correct Regions to your Zone:
To attach the regions we created to the Tax Zone we will use the Tax Junction object showing on the Tax Zone page. Navigate to your Tax Zone and create a New Tax Junction:
Add each of the created regions to your Tax Zone one at a time. You can use the Save and New function and they will continue to stack on the same Tax Zone. In the end, your tax zone will have as many junctions as you would like but a common thread would be to have a region for every taxable jurisdiction that you need to remit the tax to, times as many types of transactions that you will be collecting tax on. In the example, we used for this tutorial we were dealing with a simple 5% sales tax to a State, but to add a 2% tax to a City, we would simply need to repeat the steps on the same tax zone. Note that you will not need to replicate each tax region between zones. So for any Tax Zone that does business within your jurisdiction, you can use the same tax region. For example, R#0000 was for the State of CO, General Rate type of 5%. That can be used on every tax zone wherein that would apply.
So you can use the State level and coordinate with City and County Level regions to accurately reflect what is owed. On any Deal where you apply a Tax Zone any items that have a Region will create a unique Tax Transaction Item (TTI#0) that will be visible from the tax section of the Deal Payment Screen:
By using this, you can more closely show what tax amount is owed to each jurisdiction, and we can report on it by it's relationship to Deals processed.