Issue/Symptom/Question

Sales and Use Tax Guide

Applies To

PENTA for Windows

Reference Manual

Resolution/Fix/Answer

PENTA’s sales and use tax function eliminates the time-consuming task of calculating taxes manually. Its primary purpose is to provide a central source for you to efficiently build and maintain tax rates and jurisdictions. You have the flexibility to set up and customize tax information to suit your environment. Once you enter this information, PENTA automatically uses it to calculate taxes and presents the results in a variety of formats—on screen and in reports.

The sales and use tax function is not contained in a single module. You will notice its effects throughout PENTA, most significantly in the Accounts Payable, Financial and Accounting, Job Management, and Inventory modules.

PENTA’s sales and use tax function:

• Enables you more accurately to calculate tax liabilities.

• Saves you the time required to identify information on invoices and billings to customers.

• Provides data on windows and reports that improves information available for sales tax audits.

• Provides considerable flexibility for tracking tax within projects.

• Automatically creates open payables for tax liabilities.

• Provides sales and use tax reports that detail taxable and exempt transactions, in addition to associated tax amounts by jurisdiction.

The Sales and Use Tax Guide contains procedures for setting up and applying sales and use tax in PENTA. This Guide is for experienced PENTA users who need instructions for using the sales and use tax feature.

How to Use Sales & Use Tax

1. Create Costcode Tax Rules

Costcode Tax Rule Maintenance Window Notes

For each job and Cost Type, you can define a set of Job Cost Code tax rules. While you could enter each set separately, it is much faster to use a master template and apply it to multiple Jobs. In the previous Setup section, you created a master template for Costcode tax rules from which you can quickly build other sets of rules.

Use the Costcode Tax Rule Maintenance window to maintain a link between a set of Job/Cost Types and Costcodes—those to which you are charging committed cost and those to which you are charging the tax. This enables you to separate the tax portion of Job costs.

Purchase Orders and accounts payable invoicing use the defined tax rules to apply the tax to job costs. The rule may define such things as:

• Taxable or tax exempt.

• Taxable percent.

• Tax jurisdictions, where applicable.

• The Costcode where the expense will apply.

Guidelines for entering/changing information:

• PENTA validates the length and type of information in a Costcode field.

• PENTA does not validate the information you enter in a Costcode field if it contains the wildcard character (i.e., an underscore).

• Enter rules from the most specific to the most general.

• PENTA tries to match in sequence order (low to high). PENTA first selects those that match without the use of a wildcard.

A. Define a set of job Costcode tax rules for each job and Cost Type

Project Management > Jobs > Costcode Tax Rule Maintenance

1. Use Job Id to enter the unique code you entered on the Master tab to identify this job.

2. Use Cost Type Code to identify a type of costs within your Costcodes such as labor, materials, and subcontract work.

3. If you want to copy a template, click the Copy Tax Rules button
   PENTA launches the Copy Costcode Tax Rule Template pop-up window.

4. Enter the Id of the Tax Template you want to copy from.

5. Enter the Id of the Job or Cost Type you want to copy from.

6. Click the Copy Tax Rules button.

7. Use Seq # to identify the point in the sequence at which PENTA should apply taxes for the Costcode(s). Each sequence number contains information for the application of tax, percentage taxable, distribution of the tax amount to another Cost Type/Costcode.

8. Use Costcode to associate costs on your job.
   You can enter Costcode masks in this field to include a range of Costcodes. The only valid wildcard character is an underscore (_).
   PENTA displays the description of the Costcode giving up the tax liability. PENTA displays this only if a wildcard does not exist and if the Costcode is for a job or a standard Costcode.
   PENTA displays the description of the Costcode to which you are assigning the tax liability. This displays only if a wildcard does not exist and if the Costcode is for a job or a standard Costcode.

9. Optionally use Tax Exempt Reason Code to enter the reason why a transaction is exempt.

10. Use Taxable Percentage to enter the percentage of the taxable activity.

11. Optionally use Apply Tax to Job to transfer the tax liability from one job to another.

12. Optionally use Apply Tax to CT to transfer the tax liability from one Cost Type to another.

13. Optionally use Apply Tax to Costcode to transfer the tax liability from one Costcode to another.

14. Define a Costcode or range of Costcodes using a wildcard character. The only valid wildcard character is an underscore (_).

15. Use Direct Pay Tax to indicate whether PENTA always accrues the tax liability, and you are responsible for paying the tax authority directly. The default is from the job.

16. Optionally use the Tax Jurisdiction List pop-up window to view the tax jurisdiction values.
    These are either the defaults or the overrides for the current Costcode. For more information about the tax jurisdiction window, refer to the Tax Jurisdiction Window section.

B. Optionally enter a tax certificate for the current Costcode

Use the Tax Certificate pop-up window to enter a tax certificate for the current Costcode.

Project Management > Jobs > Costcode Tax Rule Maintenance > Tax Cert button

1. Enter a tax certificate for the current Costcode.

2. Close the window to commit your changes.

You can now create a transaction with a job distribution. PENTA will apply the tax liability to the appropriate Costcode.

2. Establish PO Tax Information

After completing this Step, you have created a list of associated taxing authorities that apply to the purchase of goods or services.

Purchase Order Information Window Notes

PENTA maintains the tax jurisdiction lists at the purchase order line item level. The tax jurisdiction list used/displayed is the one in effect for the ultimate destination point (warehouse or purchase order line item override).

To be consistent with the non-inventory line items, PENTA inserts a tax line to centralize the taxes. PENTA applies applicable tax distributions associated with jurisdictions to the warehouse’s Tax Accrual Account.

If the purchase order’s line item is for:

• Delivery to a warehouse, PENTA calculates the tax liability using the tax jurisdiction overrides or the defaults of the warehouse that were in effect as of the invoice date. You can override the information; however, PENTA does not apply the changes to the warehouse tax jurisdiction list, the changes are overrides.

• Direct shipment, the entire purchase order is tax exempt because the purchased items are strictly for resale. PENTA applies any taxes through the sales order.

A. Enter the Purchase Order’s taxable information.

Purchasing > Purchase Orders > Master tab

1. Identify the Purchase Order whose taxable information you want to define.
   Either query an existing Purchase Order or create a new one.

2. Optionally use the Taxable (Y/N) field to override the tax status of all line items—for inventory and non-inventory purchase orders. Available values are:

• Blank – For non-inventory purchase orders, the tax status of each distribution level determines what is taxable and what is tax exempt. For inventory purchase orders, PENTA uses the warehouse and product tax status to determine the tax status of each line item.

• Y – The whole purchase order is taxable. For each line item, PENTA uses the applicable tax jurisdictions and rates to calculate the taxes.

• N – The whole purchase order is tax exempt. PENTA considers all lines items taxable. If you enter this, click the Tax Info button.

1. In the Tax Information pop-up window, use Tax Exempt Reason Cd to indicate why. PENTA then displays the following values:

• Total PO Tax Amount – The sum of all tax lines.

• Line # – The tax line (first line identified on the Parameter window).

• Description –The tax line’s description.

• Amount – The tax amount.

B. Enter non-Inventory distribution information.

Purchasing > Purchase Orders > Non-Inventory Distr tab

1. If System Option 152 (Tracking Sales & Use Tax) is set to Y, optionally change the Tax Exempt Reason Cd and Tax Certificate Id field values.
   This lets you update the amount of tax to be committed and displays PENTA’s estimated tax impact.
   If you enter a value in the Tax Exempt Reason Code field, the purchase order line changes to non-taxable. For a complete description of this window, refer to the Tax Jurisdiction Window information in the Setup section.

2. To review, update, or override the purchase order line item tax jurisdiction list, open the Taxes pop-up window’s Tax Jurisdictions pop-up window.

C. Enter Inventory distribution information.

For inventory purchase orders, PENTA uses the warehouse tax jurisdiction list. From the Inventory tab, you cannot view the tax authorities affected by the current line; you must go to the warehouse to view or modify the tax jurisdiction list.

1. If you want to record an inventory distribution, enter the required fields on this tab.

2. Review the amount of tax to be committed, the tax-exempt reason code, and tax certificate.

3. Enter optional fields as needed.

4. Close the window to commit your changes.

3. Modify Invoice Tax Information

Invoice and Credit Memo Entry window

On taxable accounts payable invoices, the tax is considered:

• Sales tax if the vendor is registered in the jurisdiction(s) associated with the invoice. All taxes associated with invoices on this job are paid to the vendor.

• Use tax if the job to which the invoice is charged is set up as a direct-pay job, or the vendor is not registered. All taxes associated with invoices on this job accrue for payment directly to the jurisdiction, not the vendor.

PENTA calculates the tax on each line item on the invoice, applying the appropriate tax jurisdictions and tax types to each item. The resulting tax amount, however, may vary from the tax amount stated by the vendor on the invoice.

If the difference between the invoice tax amount and the vendor tax amount is:

• Greater than the System Option 154 tax variance amount, PENTA uses its calculated taxes. The payment check to the vendor states, “Tax calculation discrepancy, Adjusted Amount Paid.”

• Less than the System Option 154 variance amount, PENTA uses the vendor’s tax amount.

Tax Exempt Status Notes

• At the document level – If you enter the tax exempt reason code at the document level the entire invoice is tax exempt and you cannot make specific distributions taxable or non-taxable.

• At a distribution level – If you do not enter a tax exempt reason code at the document level, you can enter a tax exempt reason code at the individual distribution levels. See below for an explanation of how PENTA handles the tax exempt status for each type of distribution.

On the Distribution tabs (the individual distribution levels) PENTA does not indicate whether a tax exempt reason code exists at the document level. If you attempt to set the tax exempt reason code on the Distribution tabs, a message warns you if the code exists at the document level.

If you enter a tax exempt reason code for the:

• Purchase order, PENTA selects the tax status from the purchase order line item.

• Subcontract, the tax status is Exempt. You cannot enter a tax exempt reason code for a distribution to a subcontract. PENTA assumes subcontracts are tax exempt.

• Job, PENTA determines the tax status by looking at the distribution’s Costcode:

• If this code is linked in the Costcode Tax Rule Maintenance window, PENTA takes the tax status from here.

• If PENTA does not find a match, it uses the tax status from the Job Information window.

• OU and a general ledger account, the tax status is based on the status assigned to the OU and the general ledger account. If either is marked exempt, the transaction is exempt.

• Fixed asset, the tax status is based on the status assigned to the expense category to which the invoice is charged and the tax status of the OU that the fixed asset is assigned to. If either is marked as exempt, the transaction is exempt.

Tax Exempt Window Notes

Invoices from a vendor require the reporting of taxes or tax exemption. PENTA makes these reporting’s by purchase order line item, based on the purchase master or order detail, as well as invoices that are not purchase order-related. You may need to override the taxability of an individual line number. From within the Tax Exempt pop-up window you may create and modify the tax jurisdiction list. You can also override the tax jurisdictions currently in effect for an invoice payment or purchase order line number.

You can make the invoice tax exempt, regardless of the tax status of the individual distributions.

• Use (Tax) Exempt Reason Cd to identify why an accounts payable or detail distribution is exempt from tax. When you enter a code, a description appears next to it.

• Use Tax Exempt Cert(imitate) to enter an Id that certifies a distribution is tax-exempt. PENTA does not validate this entry.
  Tax List Overridden indicates whether the entity’s default list (N) or an override list (Y) determines the taxes.

Tax Jurisdiction Notes

• At the document level – If you enter tax jurisdictions manually at the document level, these jurisdictions take precedence. PENTA ignores subsequent jurisdictions entered at the distribution levels within the document.

• At the distribution level – If you do not set tax jurisdictions at the document level, PENTA uses jurisdictions that you manually enter at distribution levels. Jurisdictions entered in the Invoice and Credit Memo Entry window override tax jurisdictions you set for the different types of distributions (for example, tax jurisdictions assigned to a job when it was set up).See below for an explanation of how PENTA handles the tax jurisdictions for each type of distribution. The tax jurisdiction list for the:

• Purchase Order is based on your manual override. You can enter a Purchase Order’s line item list and the ship-to address in the Purchase Order Information window.

• Subcontract is not based on the lists. PENTA assumes subcontracts are tax exempt.

• Job is based on your manual override. The Costcode on the distribution in the Costcode Tax Rule Maintenance window:

• If PENTA does not find a match, it uses the jurisdiction list entered here.

• If there is not a match, PENTA uses the tax jurisdiction list associated with the job.

• The job’s address (postal code and ZIP).

• The job OU’s address.

• System Option 154 determines if the job or job’s OU address is used.

• OU and GL account is based on your manual override.

• Fixed asset is based on your manual override.

Default Tax Jurisdiction Notes

The following describes how PENTA determines the default tax jurisdictions for an entity/distribution level. If the job address has:

• A state code and postal code, then PENTA looks for a sales tax jurisdiction that matches the state and postal code. Jurisdictions that match are part of the default list.

• A state code, then PENTA looks for a sales tax jurisdiction that matches the state code. Jurisdictions that match are part of the default list.
  If all the jurisdictions are set up with state codes and postal codes, but the job only has a state code, PENTA will not find any jurisdictions.
  If some of the jurisdictions have state and postal codes and some only have state codes and the job only has state codes, PENTA uses the jurisdictions that have only state codes and ignores those with state and postal codes.

Manual Payment Window Notes

The Manual Payment window compares the amount of tax paid to the vendor with the PENTA-calculated sales tax on a manual check.

Though you can change tax jurisdictions or modify the tax amount, PENTA does not accrue sales and use tax for manual payments.

The Manual Payment window uses the same rules as the Invoice and Credit Memo Entry window. For additional details, see the Tax Exempt Distributions information, located in Accounts Payable’s Invoice and Credit Memo Entry Window Description.

If tax is paid:

If the two values are different, PENTA displays a message. You can do one of the following:

• Override the tax jurisdiction list. If you override the tax jurisdiction list, you can adjust the rates, define the exact amounts per jurisdiction, or add and subtract jurisdictions until the tax equals the PENTA calculated sales tax. Your overrides can be at the document or the distribution level.

• Modify the tax amount on the Document tab to equal the PENTA calculated sales tax. If you modify the tax amount, the check amount is equal to the sales tax plus the distribution amount.

Note: Modifying the tax amount misrepresents the amount of sales tax that is paid. You should work out the correct payment with the vendor.

If tax is not paid:

If no tax is paid, PENTA treats the document (or all distributions in the document) as tax exempt. No use tax is calculated.

If the vendor does not collect tax, but you owe it to a taxing authority, you must create a manual accounts payable invoice for each tax jurisdiction. These manual tax payments are not included in any PENTA tax liability reports.

A. Define Costcode tax rules

If you are entering or changing invoice information for a job, you should complete the Create Costcode Tax Rules instructions—as the Costcode tax rules affect how PENTA calculates taxes for the job. Refer to the Tax Exempt Status and Tax Jurisdiction information.

Information Entry and Processing > Accounts Payable > Invoices and Payments > Invoicing and Credit Memo Entry
OR
Accounts Payable > Check Processing > Manual Payment Entry

1. Query the appropriate batch.

2. Enter your invoice distributions.

3. Decide whether you want to set the tax status for the document or distribution.

• For the document, go to Step 3.A.5.

• For each distribution level, go to Step 3.A.6.

4. Open the Document tab’s Tax Exempt pop-up window.
   If the document should be:

• Tax exempt, enter the tax exempt reason code and tax certificate (optional).

• Taxable, open the Tax Jurisdictions pop-up window and verify or update the tax jurisdiction list. This list will override the jurisdictions at the distribution levels.

• Then go to Step 3.A.8.

5. To set the tax status of the:

• Purchase Order, open the Purchase Order Distribution tab.

• Job, open the Job Distribution tab.

• OU/account, open the Account Distribution tab.

• Fixed asset, open the Equipment Distribution tab.

6. Open the Tax Exemption pop-up window.
   If the distribution should be:

• Tax exempt, enter the tax exempt reason code and tax certificate (optional).

• Taxable, open the Tax Jurisdiction pop-up window and verify or update the tax jurisdiction list.

7. Repeat the previous steps for each distribution level.

8. Exit the window.
   PENTA distributes the batch. The tax liabilities created are either paid directly to the vendor or accrued for later payment to the associated tax jurisdiction.

4. Apply Payment Against the Tax Liability

Cash Receipt Entry Window Notes

The Cash Receipt Entry window enables you to enter the payments you receive from customers and distribute the amount to the appropriate jobs, line items, work orders, and accounts.

A. Complete the tax information

Note: You cannot change the tax jurisdictions, tax rates, or override tax on the Cash Receipt Entry window.

Billing & Accounts Receivable > Cash Receipts > Cash Receipt Entry > Open Receivables tab

1. Use Action to indicate whether the receivables are:

• A(vailable)

• G(ross)

• N(et)

• P(artial)

The Tax field displays the amount(s) are tax (not taxable, but actual tax). A Y indicates the line is the tax line. The Invoice field displays the number assigned to the invoice.

2. Use the Payment Amount to enter the amount paid.
   You can only enter a value in this field if the value in the Action field is P.
   Open Amount displays the amount that remains unpaid.
   Original Amount displays the original amount of the invoice.

3. Click the toolbar’s Close Window button.
   PENTA distributes the receipt and applies cash and the associated tax liability based on the amount.

5. Change Jurisdictions on Sales Orders

Sales Order Entry Window Notes

The Shipping Address & Tax Info pop-up window displays one of the following:

• Customer address, if you did not enter a Job Id on the sales order.

• Job address, if you entered a Job Id on the sales order.

• Override address, if you changed the address from one of two above.

The word “default” or “override” appears at the top of the window. You can change the address regardless of whether the current address is a default or an override.

Within The Shipping Address & Tax Info pop-up window, the following options are available:

• Reset Default Address – Clicking this button returns all values to the default address.

• Tax Jurisdiction List – Use this secondary pop-up window to view or override a tax jurisdiction list. This window is only available if you did not invoice the order.

• Name – Customer or job* name.

• Address – Customer or job* address.

• City – Customer or job* city.

• State/Prov – Customer or job* state/province.

• Postal Cd – Customer or job* postal code.

• Country – Customer or job* country.

• Tax Exempt Reason – The reason why a transaction is exempt. The description of the code appears next to it.

• Tax Certificate – Customer or job* tax certificate ID.

• Jurisdiction List – PENTA displays this list only if the invoice is still open.
  “DEFAULT” indicates the tax jurisdiction list for the ship-to address is in use. “OVERRIDE” indicates PENTA overrode the tax jurisdiction list.

• Tax Amount –Displays the Tax rate applied to tax line items.

• Full Order Amount – Displays the sale price of the order and the associated tax liability.

*PENTA displays the job address if you entered a job Id on the sales order.

Sales Tax

For sales orders, PENTA only calculates sales tax. The ship-to address in the Shipping Address & Tax Info pop-up window affects sales order tax jurisdictions.

Drop-Ship/Direct Shipment Processing Notes

When you are creating a sales order for drop-shipment, you create drop-ship line items. Releasing the sales order creates a tax exempt purchase order. When you process accounts payable for the purchase order, PENTA creates an accounts receivable invoice for the sales order.

PENTA deems any purchase order created for resale to a customer tax exempt. The purchase order master and detail lines will have:

• A taxable indicator of N.

• A tax exempt reason code of NA (not applicable).

• A tax certificate/permit of direct ship.

Sales Tax Credit Notes

PENTA issues Sales tax credits only for the credit amount given to the customer, not for the original purchase price.

Example: A $1000 item purchased at 5% sales tax ($50). The item is returned with a 20% restocking fee. The customer’s net liability (20%) for the original sale is $200 for the item and $10 sales tax. The customer receives an $800 credit for the returned item and a $40 tax credit.

A. Review and/or edit tax exempt information

Inventory > Sales Orders > Sales Order Entry

1. Query an existing or enter a new sales order.

2. Change the address (changes the tax jurisdictions used).

3. View and modify the Tax Exempt Reason Code and the Tax Certificate Code fields.

4. Create a unique Tax Jurisdiction List.

5. View the Amount of Tax and the Full Order Amount.

6. Click the toolbar’s Close Window button.
   Your shipment of material for this sales order creates the appropriate tax liability amount on the customer invoice and within PENTA. If is paid sales tax on the original purchase order for the warehouse, a sales tax credit also accrues.

6. Set the Tax Status of a Product

Product Information Window Notes

In the Product Information window, you can set the taxable status of products you have in your warehouse.

When you create invoices that include the product and the product is marked as:

• Taxable – The appropriate taxes/tax jurisdictions are applied, or

• Non-taxable – PENTA applies no taxes unless you enter overrides in the tax jurisdiction window of the Invoice and Credit Memo Entry window.

A. Set a product’s tax status

Inventory > Setup > Product Information

For each product:

1. Query the desired product.

2. Use the “Taxable Product (Y/N)” field to set the taxable status.

3. Close the window to commit your changes.

7. Transfer Goods

Inventory Transfer Window Notes

A warehouse is a vehicle to sell products. When you transfer material to a job, PENTA does not create a customer billing for the material. Penta Technologies recommends that you create a sales order to bill the customer for the material, then ship the material to the customer or the job address.

How tax is determined and accrued

Based on the product master, a specific product may be taxable or tax exempt. If the product is taxable, the point of transaction depends on the location.

The following table identifies the various interactions due to the sale of a product.

• FROM – the source selling the product (for example, a warehouse).

• TO – the product’s buyer (for example, a sales order).

For example, a product transferred from a warehouse to a job/OU account/fixed asset is considered part of the job/OU account/fixed asset and the tax is considered use tax.

A product allocated to a sales order or transferred to a warehouse is a sale and the tax is sales tax.

Debits

When you transfer products using the Inventory Transfer window, PENTA applies tax debits against the following:

• Costcode – At the Costcode level, the tax liability may reside at the Costcode that incurred the expense or it might shift to another Costcode. In either case, a Cost Type links uniquely to an account number and use tax accrues.
  The Job Type’s cost of sales account is credited or debited based on the following hierarchy:

1. Costcode rule template.

2. Job/Cost Type/Costcode account to which the material is being transferred.

• Fixed Asset/Expense Category – Use tax accrues in the asset expense category expense cross-reference account you entered in the Asset Class Information window.

• OU/Account – Use tax accrues in the general ledger account you assign in the Inventory Transfer window.

• Warehouse – Sales tax accrues in the tax accrual account you entered in the Warehouse Information window.
  The tax amount in the tax accrual account does not change if you make changes to the unit price, tax jurisdictions, or tax status after you enter the receipt or once you start accounts payable invoice processing.

Credits

For warehouses, PENTA accrues sales tax. For all others, PENTA accrues use tax. In addition, if the general ledger account is an accounts payable account, an open payable results for the appropriate tax jurisdiction(s).

A. Transfer materials

Inventory > Warehouse Transactions > Inventory Transfer

1. Enter a new batch (by entering the date) or query an existing batch.

2. To set defaults to the Transfer Detail tab for the:

• FROM location(s): Open the Batch Entry tab’s Default FROM Location pop-up window and enter the default information.

• TO location(s): Open the Batch Entry tab’s Default TO Location pop-up window and enter the default information.

3. In the Transfer Detail tab, enter all the products you want to transfer.

4. Click the toolbar’s Close Window button.
   PENTA submits the Batch for processing.

Setup Process

If you are installing or upgrading PENTA…

• If you are installing PENTA and using the sales and use tax function:

• Make sure you set up tax jurisdictions before you create organizational units (OUs), accounts, fixed assets, or jobs.

• All your OUs and jobs must have at least a state/province code. PENTA uses the state/province code to determine whether to apply sales or use tax and to select the correct tax jurisdictions.

• If you are upgrading PENTA and turning on the sales and use tax function:

• All OUs and jobs must have at least a state/province code. PENTA uses the state/province code to determine whether to apply sales or use tax and select the correct tax jurisdictions.

• You should distribute all accounts payable batches. If you distribute batches after the sales and use tax function turns on, you may get errors and incorrect postings because PENTA tries to apply sales and use taxes to invoices that do not have the necessary tax information.

Review Settings for System Options 152, 153, 154:

• Setting System Option 152 (“Sales and Use Tax Function”) to Y activates the sales and use tax function. This impacts PENTA’s purchase order and accounts payable modules, so it is important that you work with your PENTA Account Manager to activate the function properly. Once you activate the sales and use tax function, PENTA calculates tax for anything new (purchase orders or accounts payable invoices). It will not calculate for existing purchase orders.
  If you wish to change the value in the Alphabetic/Boolean field, contact your PENTA Account Manager.

• System Option 153 (“Default Jurisdiction List for Jobs”) assigns the default source for a tax jurisdiction list. The list can default either from the OU associated with the job or from the job’s address. Enter Y to get the default tax jurisdiction list for a job from that job’s OU. Enter N to get the default tax jurisdiction list for a job from that job’s address.

• System Option 154 (“Tax Variance Amount”) affects PENTA’s calculation of tax on each invoice line item for accounts payable, applying the appropriate tax jurisdictions and tax types to each item. The resulting tax amount, however, may vary from the tax amount stated by the vendor on the invoice.
  PENTA assigns a default variance amount of $.05, but you can change this value using System Option 154.
  If the difference between the invoice tax amount and the vendor tax amount is:

• Greater than this variance amount, PENTA uses its calculated taxes. The payment check to the vendor states Tax calculation discrepancy, Adjusted Amount Paid.

• Less than this variance amount, PENTA uses the vendor’s tax amount.

1. Select the Number for PO Tax Detail Line

A. Define where the tax lines start on purchase order documents.

When the sales and use tax function is active, PENTA automatically adds one or more tax lines to purchase order documents in order to control the application of the tax liability. A detail tax line, one summation tax line, or both may appear on reports. Only the summation tax line appears on the purchase order.

System Management > System Rules > System Configuration

1. Query the desired company name.

2. Open the Purchasing tab.

3. In the “Tax Lines for POs to begin at” field, enter the value that represents the first line number on which tax information should appear on PENTA purchase order documents. Valid values for this field are 0–999,999,999.
   Note: The lines above this point are reserved for PENTA-created tax lines—one per unique tax cost distribution. We recommend that you set this at a relatively high number, knowing you cannot exceed it for purchase order lines. PENTA limits manually created purchase order lines to be less than the specified value.

4. Click the toolbar’s Close Window button.

2. Define & Maintain Sales Tax Jurisdictions

Set up or change the jurisdiction for states and cities in which you do business.

For example, when you enter a sales order, PENTA calculates the estimated tax rate based on the postal code of the ship-to address, assuming a tax effective date of today. PENTA also calculates the actual tax impact at order shipment for automatic invoicing.

A. Set up or change the jurisdiction for states and cities in which you do business.

For customer sales orders, if the shipping address is:

• Defaulting from a Job Id, PENTA uses the job postal code.

• Not defaulting from a Job Id, PENTA uses the ship-to postal code.

If you do not enter postal codes, or if PENTA does not find a match during processing, it tries to match by state or province code.

Inventory > Setup > Sales Tax Jurisdictions

1. Create an Id and Description for the new Jurisdiction.

2. Enter the Id of the Jurisdiction’s Parent Jurisdiction.
   This defaults as the Id you entered in the Jurisdiction Id field.

3. Identify the State or Province of the Jurisdiction Id.

4. Enter the General Ledger Account into which PENTA accrues for sales and use tax.
   The account must have the AP edit rule.
   Note: If System Option 44 (“Multi Currency for Accounting”) is Y, PENTA displays the Currency assigned to the G/L Acct #.

5. Enter the Id of the *Vendor (state or tax authority) that receives the tax payment or credit.

6. Use the Tax Type Code to identify the type of tax:

• SALES = Sales tax

• USE = Use tax

• CONSOL = Consolidated tax

7. Use the Effective (tax rates) field to enter the date when the tax rate first takes effect.

8. Use the Rate field to enter the percentage used to determine the tax amount.
   PENTA uses this rate until the next Effective date.

9. Use the Effective (postal code) field to enter the date when the From/To postal codes (in the postal code block) first take effect.

10. Use the **From (postal code) field to enter the first in the range of sequential postal codes you want to include in this jurisdiction.
    Refer to the Guidelines for Entering USA Postal Codes section.

11. Use the **To (postal code) field to enter the last in the range of sequential postal codes you want to include in this jurisdiction.
    If you do not enter a value, PENTA assumes the From code is the only code to be used.

*Tax jurisdictions must be set up as vendors. You can assign all jurisdictions within a state to a state vendor, or create a vendor for each separate jurisdiction.

**You cannot use wildcard characters in these fields.

Postal Code Copy Notes

Use the Postal Code Copy pop-up window to copy postal codes from the previous effective date to the current effective date for the Tax Type.

Convert Tax Type – Consol or Sales & Use Notes

Use the Convert Tax Type – Consol or Sales & Use pop-up window to copy a CONSOL tax type to SALES and USE. You can also copy from SALES or USE tax type to CONSOL if the jurisdiction consolidates into one rate structure. You are copying the rates, effective date, and postal codes and can modify the copied rates. If the Tax Type is:

• CONSOL – Clicking the Convert Tax Type…button copies the tax type into the SALES and the USE tax types. PENTA displays the following message:
  “This process will convert tax rates and postal codes from CONSOL to two tax types – SALES and USE. You will need to verify tax rates for each tax type. A prompt will appear to verify you want to continue with the conversion.”

• SALES or USE – Clicking the Convert Tax Type button consolidates the sales/use tax into a single tax type of CONSOL. PENTA displays the following message:
  “This process will convert tax rates and postal codes from SALES & USE to one tax type – CONSOL. The tax rates displayed will be used for the new record. A prompt will appear to verify you want to continue with the conversion.”

Guidelines for Entering USA Postal Codes Notes

• We recommend that you consistently use the ZIP + 4 postal code:

• It is more specific and there is less room for error.

• You must use it if you want to allocate a city block to a jurisdiction.

• You can optionally enter the ZIP + 4 digit postal code with or without a hyphen between the two parts (for example, 53186-1234). We recommend that you use the hyphen for clarity. Whatever format you choose, use it consistently throughout PENTA when entering address postal codes.

• In the From field, enter the fewest number of characters that uniquely identify the first ZIP code.

• In the To field, enter the highest value. Use the ZIP + 4 digit code.

Sample Entries

Review the sample entries below to help you enter valid postal code entries. PENTA only performs these functions for United States postal codes; it does not validate or perform these functions for other postal codes (for example, Canadian postal codes).

B. Define a Jurisdiction’s Tax Type.

Prerequisites

You set up tax jurisdictions:

• We recommend you set up history tax jurisdictions that applied in the past. When you enter invoices that have past dates, this ensures that PENTA applies the proper tax rates.

• We recommend that you either set up all jurisdictions with state and postal codes or all jurisdictions with only state codes. PENTA uses the state and postal codes to determine which jurisdictions to use. For example, some of your jurisdictions have state and postal codes, and some have only state codes. You have a job with only a state code. When determining which jurisdictions match the job, PENTA uses the jurisdictions with only state codes and ignores those with state and postal codes.

• Tax jurisdictions must be set up as vendors. You can set up a state-level vendor (state of Wisconsin as a vendor) and use the state as the vendor for all lower level jurisdictions or set up each individual taxing jurisdiction as a vendor (city of Milwaukee, city of Madison, and so on).

• You must have any unique accrual accounts that you use are set up in the General Ledger Account Maintenance window. The Edit Rule is AP.

1. Define the Jurisdiction's Tax Type.
   There are two options for completing this process:

If you are upgrading or installing PENTA:

Accounts Payable > Setup > Sales & Use Tax Maintenance > Tax Jurisdictions & Rates

1. Complete the window for each jurisdiction you want to define.
   Note: If you enter a Tax Type Code of:

• SALES, you must add USE, too.

• USE, you must add SALES, too.

• CONSOL, you cannot add SALES or USE.

Note: PENTA does not maintain tax liability tables. Make sure you enter all the jurisdiction authorities and their effective tax rates. You can also enter the postal code ranges, but they are optional.

2. Exit the window.

If you are already using PENTA and not upgrading:

Accounts Payable > Setup > Sales & Use Tax Maintenance > Tax Jurisdictions & Rates

1. You need to complete only the following fields for each existing tax jurisdiction:

• State/Prov

• Vendor Id

• Tax Type Code – If you enter:

• SALES, you must add USE, too.

• USE, you must add SALES, too.

• CONSOL, you cannot add SALES or USE.

• Tax Calculation Code

2. Exit the window.

3. Define Tax Exempt Reason Codes

A. Create a tax exempt reason.

For a variety of reasons, a transaction can be exempt from sales or use tax.

Use the Tax Exempt Reason Maintenance window to define and maintain codes that describe the reason for tax exemption. When you attach a reason code to an accounts payable processing document, sales and use tax is not paid or accrued for payment. You can delete a reason code only if it is not already associated with a transaction (for example an exempt account, purchase order, or posted accounts payable batch).

Accounts Payable > Setup > Sales and Use Tax Maintenance > Tax Exempt Reason Maintenance

1. Create a three character Id and Description to represent a reason for the exemption.
   Note: Codes Y (Tax Permit/Certificate Exists), Tax (Purchase Order Tax Line), and N/A (Not applicable for Tax) are default Codes in PENTA that you cannot edit or delete.

2. Close the window to commit your changes.

PENTA will not calculate a tax liability if an exemption code exists. Both the code and its description appear on most windows.

4. Set Vendor Tax Registration

A. Associate a vendor with different states/provinces and various tax jurisdictions within each state/province and assign a registration Id to a tax jurisdiction.

At the vendor level, you can associate a vendor with different states/provinces and various tax jurisdictions within each state/province. You can also assign a registration Id to a tax jurisdiction. By default, a vendor is not registered with taxing authorities. For sales orders, you can use the tax registration listing, along with the tax state list, to determine tax reporting amounts (accruals and vendor tax payments).

In the vendor registration table, PENTA only saves states or provinces for a vendor that contain a registration Id. During an accounts payable process, a tax payment remits to a vendor only if it is registered with the taxing state or province—unless the direct-pay of tax liability exists on the Job Information window.

Taxes on an invoice may be a combination of the taxes paid to the vendor and taxes accrued to a jurisdiction. If the vendor-charged sales tax and is registered in PENTA, sales tax is paid to the vendor. If the vendor is not registered in PENTA, tax is accrued (and paid to) the appropriate tax jurisdiction.

Tax Registration tab:

• Vendor Id – Unique Id associated to a vendor.

• State/Prov – State or province of jurisdiction.

• Juris Id – The code for the area (jurisdiction) in which the vendor is registered.

• Description – The description of the jurisdiction Id.

• Registration Id – Issued by the tax jurisdiction to a vendor affirming that the vendor is taxable within that area.
  If you enter only a registration Id for the state/province tax jurisdiction Id, PENTA assumes that the vendor is registered in all jurisdictions for that state/province.

• Parent Juris Id – The parent area (jurisdiction) for the code entered under Juris Id.

Accounts Payable > Vendors > Vendor Information

1. Do one of the following:

• Set up a new vendor by entering necessary information in the first three tabs of this window.

• Select an existing vendor (perform a query).

2. In the Tax Registration tab, view the Previous Record or Next Record to display the desired state/province.
   PENTA will issue a warning if the first state does not have tax jurisdictions assigned.
   Note: You can access the Tax Registration tab only if System Option 152 is Y.

3. If there are no states or provinces assigned to the vendor, PENTA asks if you want to populate with all possible States/Provinces and their Tax Jurisdictions.
   Reply Y (yes) to add all the states and jurisdictions to the vendor. Reply N (no) to prevent adding states and jurisdictions to the vendor. You must add the desired states and jurisdictions.

4. If a state and/or province exists but there is no Jurisdiction Id assigned to the vendor, PENTA asks if you want to populate with all Tax Jurisdictions.
   Reply Y to add all the jurisdictions to the state/province. Proceed to Step 4.A.5.
   Reply N to prevent adding any jurisdictions to the state/province. You must add the desired jurisdictions. Proceed to Step 4.A.6.

5. Place focus in the next section.
   A “Default Registration Id to be inserted:…………..” message enables you to assign a default Registration Id which is assigned to every jurisdiction in that state/province. If the same (default) Id:

• Should be assigned to every jurisdiction, enter the value and close the window.

• Should not be assigned to every jurisdiction, close the window.

6. If necessary, change the information for the jurisdictions.

7. Click the toolbar’s Close Window button.
   Now that your vendors are registered with taxing states, they can receive the tax amount due for an accounts payable invoice. PENTA records the activity as tax liability paid to vendor.

5. Enter OU & Account Tax Information

About the Tax Jurisdiction Window:

The tax jurisdictions contain rates applied to the transfer of goods. The information in the Tax Jurisdiction window comes from the Sales Tax Jurisdiction Maintenance window (refer to the Define and Maintain Sales Tax Jurisdictions section for more information). This window shows the most recent tax jurisdictions that have dates that are equal to or less than the current (or invoice) date.

The window displays the tax jurisdiction rates applied to the transfer. If there are no jurisdictions equal to or less than the current (or invoice date), the closest future jurisdiction is displayed but the applied rate and amount of tax are set to zero.

Use this window to create a default list of tax jurisdictions or a customized one. You can use the default tax jurisdiction list created by the entity or create a unique list.

During accounts payable processing, you can change the jurisdiction list (the default or list created during the purchase order process) in the Invoice and Credit Memo Entry or Manual Payment Entry windows.

For information on the use of these windows for sales and use tax, refer to the Modify Invoice Tax Information section.

The Tax Jurisdiction window appears in the following windows:

• AP Invoice and Credit Memo Entry – Document tab and Tax Exemption pop-up in the PO Distribution, Account Distribution, Equipment Distribution, Work Order Distribution, and Job Distribution tabs

• Costcode Tax Rule Maintenance – main window

• Sales Order Information – Master tab

• Job Information – Sales/Use Tax tab

• Manual Payment Entry – Tax Exemption pop-up in the Document, PO Distribution, Job Distribution, Account Distribution, Asset Distribution, and Work Order Distribution tabs

• Organizational Unit Maintenance – Legal Entity tab

• Purchase Order Information – Taxes pop-up on the Non-Inventory Distribution tab

• Warehouse Information – main window

*The Tax Jurisdiction window is only available if the order is not yet invoiced. This window is labeled Sales Order Entry in the menu (refer to the Sales Order Entry section for more information).

1. Indicate whether the Tax Type is SALES = Sales tax, USE = Use tax, or CONSOL = Consolidated tax

2. Juris Id – A unique identifier for a taxing authority.

3. State/Prov – State or province of the jurisdiction Id.

4. Enter the *Effect Date when the tax rate took (takes) effect.*

5. Enter the **Applied Rate for the percentage of tax PENTA will apply to the item.
   If you change the value of this field, PENTA re-calculates the tax amount for the Amount and Consolidated Amount fields and sets the Amount column to blank. If zero displays, the tax jurisdiction is not in effect and you cannot override the rate.

6. Enter the **Amount of tax PENTA calculated for the entity (for example, purchase order).

7. Indicate whether the vendor a registered vendor.
   This is blank until there is an Accounts Payable transaction.

*If there are tax jurisdictions with an effective date that is further in the future than the tax date, PENTA does not show those tax jurisdictions or apply them to the item. If no tax jurisdictions are equal to or less than the tax date, PENTA displays the first (closest) future tax jurisdiction, but the applied rate displays as zero and PENTA does not calculate taxes for the item.

**In the accounts payable and purchase order windows, you can change the value of the applied rate, which changes the amount of accrued tax.

PENTA displays the following values:

• Taxable Amount – The amount (part of the total) that is taxable. This is zero in set up windows.

• Composite Values Default – The sum of the individual rates (total percentage of tax) and sum of the calculated taxes.
  Composite fields reflect overrides you make to the rate or amount.

• Tax Date – PENTA looks for a date in the following order: sales order date, invoice date, and issue date (from purchase orders). If PENTA finds no dates, it uses the current date.

B. Set up a new OU and verify the OU’s taxability.

Notes on Overrides and Resetting Defaults

On the Purchase Order, Purchase Order – Grid Option, Invoice & Credit Memo Entry, Employee Job Expense Entry, Manual Payment Entry windows, you can enter a rate and amount as an override. An asterisk next to a field indicates that you have overridden the default. If you add a jurisdiction or make any change to an applied rate, PENTA considers all jurisdictions overrides.

Click the Reset Rates & Amts to Defaults button if you need to reset the applied rates and amounts to the default and delete added tax jurisdictions.

Notes on Setting Up a New OU

If System Option 152 is set to Y (i.e., you use PENTA’s sales and use tax function), you must have at least one jurisdiction set up. When setting up the OU, you must either assign the tax jurisdictions or make the OU tax exempt.

PENTA creates default tax jurisdiction lists for your OUs and defines tax exempt statuses for your general ledger accounts. You should check them to make sure they are appropriate.

There are three tax-related elements in various locations in PENTA that require setup or review—Tax Jurisdiction window, Tax Exempt Reason Code field, and Tax Exempt Certificate field.

Finance & Accounting > Setup > Organizational Units > Organizational Units

1. Enter required fields in the Setup/Address tab.

2. Open the Legal Entity tab and check the OU’s tax exemption status.
   If the OU is:

• Tax exempt, complete the Exempt Reason Code and the Tax Exempt Certificate (optional) fields.

• Taxable, verify or enter the information in the Tax Jurisdiction pop-up window.

3. Click the toolbar’s Close Window button.

C. Enter chart of accounts tax information.

Finance and Accounting > Accounts > Chart of Accounts

1. Query all records.

2. For each account that should be tax exempt, enter the appropriate information in the Tax Exempt Reason Code and Tax Exempt Certificate (optional) fields.

3. Click the toolbar’s Close Window button.

6. Enter Warehouse Tax Information

A. Identify warehouse tax information.

A Warehouse Id uniquely identifies a warehouse in your organizational unit. If a warehouse is:

• Tax exempt, all items within the warehouse and all transactions are tax exempt. To make a warehouse tax exempt you must assign a tax exempt reason code.

• Taxable and you use the sales and use tax function:

• You must assign an account number as the Tax Accrual account. This is the account in which PENTA accrues sales and use tax expense applied to the warehouse.

• PENTA uses the state/province or postal code of the warehouse to determine what to use as the tax jurisdiction list.

Inventory > Setup > Warehouse Information

1. Enter the Id of the Warehouse.

2. Enter the Id of the balance sheet OU which owns the inventory at the warehouse.

3. Enter the warehouse’s postal Address – line 1, 2, 3, City, State/Province, Postal Code, and Country.
   PENTA does not validate the address. Country represents the country where personnel will print warehouse documents.

4. Enter the Id of the Printer that prints the documents.

5. Enter the Tax Cert Id that certifies a distribution is tax exempt.
   PENTA does not validate this entry.

6. Use Tax Exempt Cd to enter the reason the warehouse is tax exempt.

7. Use Location Class to enter the attribute (like a location or characteristic) you want to apply to a group of products. For example, a location could be a lock-down zone or damaged goods. Define at least one location class per warehouse Id.

8. Identify the Account # that holds the value of all products held in this class.
   Each Location Class can use the same general ledger account number or a different account number. This must be a valid account number (with an inventory edit rule) for the balance sheet OU.

9. Indicate (with a Y for yes or an N for no) whether the product is Available for allocation.

B. Define and update these general ledger (GL) account numbers.

PENTA needs general ledger accounts for various processes that handle receipts, sales orders, and audits. Use the Warehouse Information window’s Default Account Numbers pop-up window to define and update these account numbers.

Inventory > Setup > Warehouse Information > Accounts Info button

1. Use Inventory Adjustment to define the GL account in base currency for audit corrections.

2. Use Cost of Goods Sold to define the GL account in base currency for cost of goods sold.

3. Use Sales Revenue Accrual to define the GL account in base currency for the revenue generated by the sales order.

4. Use PO Receipt Accrual to define the GL account in base currency for purchase order receipts.

5. Use the Accounts Receivable to define the GL account in the base currency for the sales order amount.

6. Use Tax Accrual Acct to define the account in which PENTA accrues sales and use tax applied to the warehouse.
   This must be a valid, active account for warehouse OUs, with no parent account, account class, Currency Id, or tax exempt reason code restrictions. This is required if System Option 152 is set to Y.

7. Use Vendor Direct/ WHSE Loc to define the location where drop shipments are processed.

8. Use Acct# to define the inventory account used for processing drop shipments.

9. Close the window to commit your changes.

C. Assign default tax statuses to your warehouses and tax exempt reason codes for your customer orders.

Inventory > Setup > Warehouse Information > Tax Juris button

1. If the warehouse is to be:

• Tax exempt, complete the Exempt Reason Code and the Tax Exempt Certificate (optional) fields.

• Taxable, use the Tax Jurisdiction pop-up window to verify or fill-in the tax jurisdiction information.

Note: Update the tax jurisdictions if you do not want to use the default tax jurisdictions. (You cannot change the rates; you can only add or delete jurisdictions.)

2. Close the window to commit your changes.

D. Verify/identify the tax accrual account.

Inventory > Setup > Warehouse Information > Accounts Info button

1. Enter the appropriate account number in the Tax Accrual Acct field. This must be a valid, active account for warehouse OUs, with no parent account, account class, currency Id, or tax-exempt reason code restrictions.

2. Exit the pop-up window and main window.

7. Set the Tax Status for Customers

A. Set the tax exemption reason code.

If you enter a code, PENTA assumes the entire sales order is tax exempt. If System Option 152 (“Tracking Sales & Use Tax”) is set to N, you can still enter the tax information, but PENTA will not use it.

Billing & Accounts Receivable > Customers

1. Query the desired Customer(s).

2. For each customer whose sales orders are tax exempt, use the Sales Order tab to enter the appropriate information in the Tax Exempt Reason Code and Tax Exempt Certificate (optional) fields.

• If you enter a tax-exempt reason code, the sales order will be tax exempt when a user creates the sales order.

• If you change or delete the reason code, the change does not affect existing orders.

3. Click the toolbar’s Close Window button.

8. Set Expense Category Tax Status

A. Denote activity applied against a unique expense category as tax exempt.

You can also assign a specific tax exempt reason code and/or tax certificate to each expense category.

Fixed Asset Management > Setup > Expense Categories

For each expense category that is tax exempt:

1. Select the desired expense category (perform a query) or enter a new expense category.

2. If the category should be tax exempt, verify that (or change) the Tax Exempt field has a Y in it.

3. If the category has a reason code or tax certificate assigned to it, enter the appropriate information in the Tax Exempt Reason Code and Tax Exempt Certificate (optional) fields.

4. Click the toolbar’s Close Window button.

9. Create a Template for Costcode Tax Rules

A. Define a set of Costcode tax rules for the situations where tax should not be applied to the Costcode that purchased goods or services.

For each Job and Cost Type, you can define a set of Costcode tax rules for the situations where PENTA should not apply the expense of the tax to the Costcode that purchased the goods or services. While you can enter each set separately, it is faster to use a template and apply it to multiple Jobs.

You can define as many templates as you need and you may modify them at any time. Changing the template does not change Jobs you already set up.

Accounts Payable > Setup > Sales & Use Tax Maintenance > Costcode Tax Rule Template

1. Create a unique Id and Description for the Tax Template.

2. Enter a Sequence # for the Tax Template.
   Enter a Costcode Mask.
   This is the same Costcode or a Costcode with embedded wildcards. The only valid wildcard character is the underscore (_).

3. Use Taxable Percentage to enter the percentage of the activity that is taxable.

4. Enter a Direct Pay Tax value.
   If this is Y, PENTA always accrues the tax liability and must pay the tax authority directly.

5. Enter an (Apply Tax to) Cost Type where the tax liability is charged, as opposed to the Cost Type that created it.

6. Enter an (Apply Tax to) Costcode to identify a range of Costcodes where the tax liability is charged. The only valid wildcard character is the underscore (_).
   From CC Descr shows the beginning Costcode in a range of Costcodes. This displays only if a wildcard does not exist and it is a standard Costcode.
   To CC Descr shows the ending Costcode in a range of Costcodes. This displays only if a wildcard does not exist and it is a standard Costcode.

7. Close the window to commit your changes.

B. Copy information from one template to another set of rules for a job.

Accounts Payable > Setup > Sales & Use Tax Maintenance > Costcode Tax Rule Template > Copy Costcode Tax Rule Template

Use the Copy Tax Rules pop-up window to copy information from one template to another set of rules for a job.

You can define as many templates as you need and you may modify them at any time. Changing the template does not change jobs you already set up. Guidelines for entering information are:

• PENTA validates the type and maximum length of information in a Costcode field.

• PENTA does not validate the information you enter in a Costcode field if it contains the wildcard character: underscore (_).

• Enter rules from the most specific to the most general.

• PENTA tries to match in sequence order (low to high). PENTA first selects Costcodes that match without the use of a wildcard.

• When entering sequence numbers, we suggest that you use a numbering scheme that enables you to insert future entries between existing lines. For example, if you enter numbers by tens (10, 20, 30…), you can later insert numbers between any two existing numbers. This would not be possible if you entered them sequentially starting with 1 (1, 2, 3…).

1. Copy the existing template to a new template and modify it as you wish.

2. Copy a template to a job, then modify it to meet your needs.

3. Close the window to commit your changes.

10. Enter Job Tax Information

Sales and use tax amounts can accumulate within job costs differently for each job, or universally for all jobs. Tax can:

• Follow the same cost distribution as the base invoice amount (per distribution)

• Be split off to:

• A specific Costcode on a job.

• A specific Cost Type and a variety of Costcodes using Costcode masks.

A. Define individual Costcodes or Costcode masks as tax exempt or partially taxable.

Project Management > Jobs > Job Information

1. Query an existing or create a new Job record.

2. On the Primary tab, enter the address of the job.
   PENTA uses the state/province and the postal code to determine which tax jurisdictions to use as defaults on the Sales/Use Tax tab’s Tax Jurisdictions pop-up window. For an explanation of which tax jurisdictions PENTA uses when calculating tax for a job, refer to Modify Invoice Tax Information.

3. On the Sales/Use Tax tab, assign the payroll tax codes, the taxable status of the job, and indicate how the tax distributes.
   For information on the fields in this tab’s Tax Jurisdiction pop-up window, refer to the Tax Jurisdiction Window section.

4. If PENTA should calculate state unemployment withholding based on the job site rather than employee residence, enter a *SUT State Code.
   Note: PENTA also calculates SDI and SUI for this state instead of the employee’s state.

5. If PENTA should calculate state income tax based on the job site rather than employee residence, enter a *State Payroll Tax Code.

6. If PENTA should calculate local withholding according to the job site rather than employee residence, enter a *Local Payroll Tax Code.

7. Use **Sales & Use Tax-Direct Pay to indicate whether PENTA should accrue the tax liability, regardless of vendor registration.

8. Use **Job is Taxable (Y/N) to indicate whether the Job is taxable.
   If you enter N, you must enter a Tax Exempt Reason Code.

9. Optionally use Default Tax Distr – Default job Id used by PENTA when distributing the tax liability.

10. Optionally use **Default Tax Distr to identify the default Cost Type used by PENTA when distributing the tax liability.

11. Optionally use **Default Tax Distr to identify the default Costcode used by PENTA when distributing the tax liability.

12. Optionally use **Default Tax Distr - Taxable % to identify the default percentage used by PENTA when distributing the tax liability.

13. Optionally use **(Cost) Tax Exempt Reason Cd to enter the reason why a transaction is exempt.
    Entry is required if the Job is Taxable field is N.

14. Optionally use (Cost) Tax Exempt Certificate to enter the tax-exempt certificate Id issued to a company or contractor.

• PENTA includes any employees to whom the change applies when producing tax reports for this state.

**Entry is required only if System Option 152 is Y.

B. Define default tax jurisdictions for Job(s).

PENTA finds the default tax jurisdictions for a job based on System Option #153 (“Default Tax Jurisdiction”). If System Option #153 is set to Y, PENTA uses the tax jurisdiction from the Job’s OU Id as the default. If System Option #153 is set to N, PENTA uses the tax jurisdiction from the Job’s address as the default.

If System Option 152 is Y and a job is tax exempt, you must enter a reason code for it. If a job is not tax exempt, you must associate one or more tax jurisdictions for each tax type.

Project Management > Jobs> Job Information

1. Query the Job for which you want to define jurisdictions.

2. Open the Sales/Use Tax tab.

3. In the Job is Taxable field, enter:

• Y if the job is taxable. Skip ahead to Step 10.B.7.

• N if the job is tax exempt.

4. In the Tax Exempt Reason Cd field, enter the appropriate reason code.
   Tax exempt jobs must have a reason code.
   You can also enter the tax certificate in the Tax Exempt Certificate field (optional).

5. Open the Sales/Use Tax tab’s Tax Jurisdiction pop-up window and verify the jurisdiction list.
   PENTA uses the tax jurisdiction list based on the Job’s address (or the OU’s address if System Option 153 is Y).

6. Repeat these steps for each tax exempt Job, set up a jurisdiction for tax-exempt jobs in case accounts payable overrides the tax-exempt status.

7. Click the toolbar’s Close Window button.

You can now create purchase orders that use the job information to control the distribution of taxes. The creation of Costcode tax rules replaces the job defaults.

View a Transaction’s Detail

A. Review a transaction’s detail

Information Entry and Processing > Accounts Payable > Queries > Tax Jurisdiction Summary

1. Select the tax jurisdiction you want to view.
   You may select one of the following options:

• Jurisdiction – Select this from the list of values (LOV) pop-up window in the main block.

• Parent jurisdiction – Enter this in the Parent Juris field in the Additional Selection Criteria pop-up window.

2. For the jurisdiction you chose, select the group of transactions you want to view.
   You can display:

• All transactions – all transactions associated with the selected tax jurisdiction automatically display in the left detail block.

• Selected transactions – use the Additional Selection Criteria pop-up window to select a set of transactions based on the criteria you identify. You can enter data in as many fields as you wish.

Note: PENTA always uses the additional Selection Criteria, unless you clear the Selection Criteria by clicking Clear Additional Selection Criteria button or exit the Tax Jurisdiction Query window.

3. In the left detail block, select the transaction you want to query by moving your cursor to the transaction. PENTA displays the transaction information in the right detail block.

4. When you are finished, click the toolbar’s Close Window button to commit your changes.

Tax Jurisdiction Query Window

Accounts Payable > Inquiries > Tax Jurisdiction Query

The Tax Jurisdiction Query window shows information about transactions associated with a jurisdiction. Similar information appears on the following reports:

• Journal Detail Report

• Journal Summary Report

• Sales Journal

• Goods and Services Detail Report

• Job Cost Detail Report

This window has the following blocks:

• Main – In the Tax Juris field, enter the jurisdiction you want to query. You cannot add or delete the values in this block.

As an alternative, you may select a parent jurisdiction in the Parent Juris field in the Additional Selection Criteria pop-up window.

• Left detail – Shows transactions associated with the query you requested. Select the transaction you want to query.

• Right detail – Shows the transaction you selected in the left detail block.

Additional Selection Criteria button

Accounts Payable > Inquiries > Tax Jurisdiction Query > Additional Selection Criteria button

Use the Additional Selection Criteria pop-up window to narrow your search for tax jurisdiction information. When you exit the Tax Jurisdiction Query window, PENTA automatically clears the entries in this pop-up window.

Listed below are some of the fields in the Additional Selection Criteria pop-up window for which the meaning or use may not be immediately apparent.

Available fields are:

• Start Date & End – Date range when the tax liability occurred.

• Tax Type – The type of tax—sales, use, or both (consolidated).

• Remitter – The entity that received the tax—A(ccrued) by PENTA for payment, C(ustomer) will pay, V(endor)’s amount to pay.

• PO OU Id – The organizational unit to which the purchase order belongs. This field replaces the Sales Order Id field.

• Document – The invoice Id.

Clear Additional Selection Criteria button

Accounts Payable > Inquiries > Tax Jurisdiction Query > Additional Selection Criteria button > Clear Additional Selection Criteria button

Clicking the Clear Additional Selection Criteria button clears entries you made in the Additional Selection Criteria pop-up window.

Sales & Use Tax Reports

Cash Receipt Report (CASHRECEIPT)

Module: Accounts Receivable

When System Option 152 is set to Y, the Cash Receipts report expands to include two additional fields; the amounts on the report are in source currency.

• Gross Amount Taxable

• Tax Liability associated with the receipt of payment

Chart of Accounts List (CHART)

Module: Finance & Accounting

When System Option 152 is set to Y, this report displays the fields identified below. The information in these fields is the default for activities associated with the affiliated account number.

• Tax Exempt CD – The tax exempt reason code. It represents a valid reason for exempting a transaction from tax.
  Sample: RLS

• Description of Tax Exempt CD – A short description of the tax exempt reason code.
  Sample: Inventory for resale

• Tax Certificate ID – This is usually the reseller’s certificate or a jurisdiction’s tax exempt certificate.
  Sample: WI-123-4567-890

Job Cost Tax Detail Report (JCTAX)

Module: Project Management

The Job Cost Tax Detail report has two versions—one for taxable accruals and one for tax exempt amounts.

If there are multiple rows for a Cost Type/Costcode on a Purchase Order, only one prints on the report. PENTA displays tax amounts in source currency for the Job, not the Vendor/Purchase Order currency.

Job Master Report (JOBMSTR)

Module: Project Management

The Job Master report contains sales and use tax information.

• Default Tax Jurisdiction – Default tax jurisdiction for a job as defined on the Job Master window.

• Tax Type – Sales, Use, or Consol.

• Juris – Jurisdiction associated with this vendor.

• % – The tax percentage.

• Par – The Parent jurisdiction.

• Description – Name of the parent jurisdiction.

• Acct – Jurisdiction’s accounts payable account.

• Registr # – State registration associated with this vendor.

• Job, Cost Type, and Costcode – You set these fields in the Job Maintenance window and PENTA uses them as a default for all tax liability unless there is an override, such as a job Costcode rule, purchase order override, or accounts payable override.

Purchases Journal Report (PURCHJRNL)

Module: Purchase Orders

When System Option 152 is set to Y, the Taxes Paid field appears on the Purchases Journal report. The Taxes Paid field shows the amount of tax liability associated to the purchase order. This amount was either paid to a vendor or accrued for payment directly to the tax jurisdiction.

Sales Journal Report (SALEJRNL)

Module: Project Management

On the Sales Journal report, the Tax Liability column shows the amount of the sales tax liability associated with the invoicing of a sales order.

Sales & Use Tax Detail Report (SALESUSETAX)

Module: Project Management

The Sales & Use Tax Detail report shows the expenditures of accrued taxes by legal entity and tax jurisdiction. The fields below appear on the report and relate to sales and use tax.

• Gross Amount – Full invoice amount without tax amount.
  Sample: $ 50,000

• Discount Amount – Amount subtracted from the gross.
  Sample: $ 1,000

• Freight Amount – Tax exempt freight only.
  Sample: $ 500

• Taxable Amount – The tax amount from the purchase order history.
  Sample: $ 48,500

Tax Code Master Report (TAXCODEMSTR)

Module: Project Management

The information on the Tax Code Master report is similar to that found on the Sales Tax Jurisdiction Maintenance window. The report sorts by state, tax jurisdiction, and tax type.

The fields below appear on the report:

• Rate is the tax rate in effect until the next effective date.

• Postal Code is the code and postal ranges by effective date.

• Address is the remit-to address of the vendor who will receive the tax liability amount.

Tax Journal Reports (TAXDETAIL & TAXSMY)

Module: Project Management

The detail and summary tax journal reports contain information that is similar to the Tax Jurisdiction Query window.

The fields below appear on the report:

• Document – The PENTA Document Id.

• Amount – Amount of the tax liability displayed in the tax jurisdictions currency.

• Remitter – Who is responsible to remit the amount to the tax authority:

• Vendor

• Customer

• Accrual—you are responsible

Vendor Reports (VENLIST & VENLISTNA)

Module: Accounts Payable

When System Option 152 is set to Y, the Vendor List by Vendor Id and Vendor List by Vendor Name reports include several tax-related fields. These fields identify the tax jurisdictions associated with the vendors.

The fields below appear on the report:

• Tax Type – Sales, Use, Consol(idated).
  Sample: Consol

• Juris – The jurisdiction associated with the vendor.
  Sample: Alabama

• % – The percentage of tax taken out for the jurisdiction.
  Sample: 7.000%

• Par – The parent jurisdiction.
  Sample: Alabama

• Description – Title of the parent jurisdiction.
  Sample: State of Alabama

• Acct/Registr #– The account number and tax registration code.
  Sample: 280ALST 123312