The following examples illustrate the sales tax options:

  1. If the Tax Services check box on the Rates tab of Customization is not selected, sales tax cannot be charged on fees. Likewise, if the Tax Expenses or Tax Advances check boxes in Customization are not selected, sales tax cannot be charged on expenses or advances respectively.

  2. When entering a transaction for a client with a sales tax rate code of 2 and the transaction code is designated as taxable, sales tax rate 2 will be used when assessing the sales tax unless you change the sales tax rate code for that entry.

    Note: During data entry for task based billing clients, a combination of Phase/Task code and Activity/Expense ID is used instead of a transaction code. Therefore the default sales tax rate for the transaction is determined by the sales tax rate code of the transaction code assigned to the Activity or Expense ID code.

  3. When entering a transaction for a client with a sales tax rate code of 4 and the transaction code is designated as nontaxable, no sales tax will be charged unless you enter a sales tax rate code for that entry.
  4. When entering a transaction for a client with a sales tax rate code of 0 (no tax) and the transaction code is designated as taxable, no sales tax will be charged unless you enter a sales tax rate code for that entry.

In summary, you have total control over whether each individual fee, expense and advance entry is to be taxed and at which rate.

Keep in mind that sales tax is assessed at the time statements are run. For example, let's say you have sales tax enabled when a fee is added, and then you turn off sales tax. If you were to print a Transaction File List, it would show that the transaction still has a sales tax code. However, if you run a statement with that fee transaction, no tax would be assessed because sales tax is turned off at the system level.