Issue/Symptom/Question

Can you provide more detail on how option 361 will function? Could it be used for one OU only or modified during entry through the Invoice and Credit Memo Window?

Applies To

System Management > Technical Support > Options - Option 361:  Adjust Tax Entered on Invoice

Accounts Payable > Invoice & Credit Memo Entry > Document Tab - TAX - Amount

Resolution/Fix/Answer

The enhancement to introduce system option 361 allows companies to “shut-off” sales tax adjustments on A/P invoices where the vendor has charged sales tax.  There is no ability to assign this option to a single OU or a single invoice.  
If this option is active and tax is entered on the Document tab of the Invoice & Credit Memo Entry screen, PENTA will not adjust the sales tax amount, regardless of the value of option 154 (Sales & Use Tax Variance Limit).  Instead, Penta will either pay the vendor the tax (if the vendor is registered in the tax jurisdictions or option 271 (Pay Tax as Reported on Invoice) = Y) or will pay the tax vendor the amount on the invoice if the vendor is not registered.

This new option is necessary because there are situations when the sales tax charged by a vendor is different than the sales tax amount PENTA calculates based on the jurisdictions/rules defined for the job, organization unit, etc. to which the invoice is charged.  Many times, there is a valid reason for the tax being different, for example the vendor charges tax based on where the materials are being purchased in lieu of where the job is located (ex. purchases at a big box store such as Lowes or Home Depot).  In these situations, PENTA generates an unnecessary tax accrual entry because it is unaware of these circumstances.

• If option 361 is set to “N”, (Pay tax on the doc tab, do not adjust the tax)PENTA does not adjust the tax for any accounts payable invoice for which the user has entered tax on the document tab.
• If this option is “Y” (Adjust tax amt on doc tab if <> tax variance amt), PENTA works as it does today.  
  • The value for option 154 defines the sales tax variance amount.  
  • PENTA compares the tax entered on the invoice to the tax calculated by PENTA for the invoice (based on the jurisdictions assigned to the invoice distributions), 
  • If the difference exceeds the sales tax variance amount, PENTA adjusts the tax to the PENTA calculated tax amount.  
  • If the difference is within the sales tax variance amount, no tax adjustment is made.

The option to turn off any PENTA sales tax adjustment on AP invoices where the vendor has charged sales tax will alleviate this issue.