Tax Zones and Categories: To Review Tax Categories and Create a Tax Zone for Sales Taxes

By performing the following implementation activity, you will review tax categories and their settings and learn how to create a tax zone for sales taxes.

Story

The Muffins & Cakes company, which operates in Denver, Colorado, provides delivery services that are subject to a 8.31% sales tax. While two tax categories have been already created in MYOB Acumatica (TAXABLE and EXEMPT), no other tax configuration has been performed.

You need to assign the TAXABLE tax category to the needed non-stock item (DELIVERY). You also need to create a tax zone for Denver, Colorado, to which you will also assign the TAXABLE category as the default tax category of the tax zone.

Configuration Overview

In the U100 dataset, the following tasks have been performed for the purposes of this activity:

  • On the Tax Categories (TX205500) form, the TAXABLE and EXEMPT tax categories have been configured.
  • On the Taxes (TX205000) form, the NYSTATETAX and NYNOTAX taxes has been configured.
  • On the Non-Stock Items (IN202000) form, the DELIVERY item has been configured.

Process Overview

In this activity, you will first review the tax categories on the Tax Categories (TX205500) form and the taxes in these zones, and then assign the TAXABLE category to an item on the Non-Stock Items (IN202000) form. You will then create the needed tax zone on the Tax Zones (TX206000) form, assigning the appropriate default tax category to it.

System Preparation

Before you begin to work with tax categories and tax zones, do the following:

  1. Launch the MYOB Acumatica website with the U100 dataset preloaded, and sign in as a system administrator Kimberly Gibbs by using the gibbs username and the 123 password.
  2. As a prerequisite activity, make sure a tax report has been configured as described in Tax Report Configuration: To Create a Tax Report for Sales Taxes.

Step 1: Reviewing Tax Categories and Assigning a Tax Category to a Non-Stock Item

To review the existing tax categories and assign a tax category to a non-stock item, proceed as follows:

  1. Open the Tax Categories (TX205500) form.
  2. In the Tax Category ID, select TAXABLE and review the taxes included in the tax category.
  3. Click the NYSTATETAX link in the Tax ID column to open the tax on the Taxes (TX205000) form. Notice the Tax Schedule settings in the table. For the TAXABLE category, for the NYSTATETAX assigned to this category, the tax rate of 8.875 with the 1/1/2024 date is applied, the Group Type is Output and the Tax Agency in the Summary area is specified. It means that sales with this sales tax will be shown in the tax report generated for this agency.
  4. Close the Taxes form and return to the Tax Categories form.
  5. In the Tax Category ID, select EXEMPT and review the taxes included in the tax category.
  6. Click the NYNOTAX link in the Tax ID column to open the tax on the Taxes form. The EXEMPT category contains the tax with the tax rate of 0, indicating that the goods assigned to this tax category are exempt from the sales tax, but the Group Type is Output and the Tax Agency in the Summary area is specified. It means that exempt sales will be shown in the tax report generated for this agency because the specified reporting group is associated with report lines.
  7. Close the Taxes form and return to the Tax Categories form.

    All of the company's current sales taxes fit into the defined categories and will be assigned accordingly.

  8. Open the Non-Stock Items (IN202000) form.
  9. In the Inventory ID box, select DELIVERY. You will assign the appropriate tax category to this item, because the delivery services are taxable and you need to change the preconfigured tax category for this item.
  10. On the General tab (the Item Defaults section), in the Tax Category box, select TAXABLE.

    This tax category will be inserted by default into the lines of documents in which this item is specified; however, you can override it.

  11. On the form toolbar, click Save to save your changes.

Step 2: Creating a Tax Zone

Do the following to create the tax zone for Denver:

  1. Open the Tax Zones (TX206000) form.
  2. On the form toolbar, click Add New Record, and create a tax zone with the following settings in the Summary area:
    • Tax Zone ID: DENVER
    • Description: Denver tax zone
    • Default Tax Category: TAXABLE

    The specified tax category will be used by default for this tax zone in document lines in which an item is not specified.

  3. On the form toolbar, click Save to save your changes.

    Taxes can then be created and assigned to this tax zone.