Prism Users Guide - Chapter 5. Taxes
5.6 Tax Areas
A Tax Area is a specific tax locale where a tax rate is applied. Each Tax Area has one or more Tax Rules (one rule for each Tax Code) that specify the tax rate to be applied to items assigned the Tax Code for that Tax Rule. For example, a Tax Area named FOLSOM has a Tax Rule for the TAXABLE Tax Code that specifies items with that Tax Code get 8.75% tax.
Notes about Tax Areas
| Number of Tax Areas | If all of your sales are made within one tax jurisdiction, you may need only one tax area. If you sell under several jurisdictions, each with different tax reporting requirements, you will need tax areas for each. |
| Tax-exempt sales | If you make sales to tax-exempt organizations such as schools and churches, set up a tax-exempt tax area with zero tax for use on those sales. You will then be able to quickly select that tax area at POS and track receipts by tax area on reports. |
| VAT Rates | The rates for VAT are defined the same as for sales tax by simply entering the percentage in the first "Rate" column. Sliding taxes and luxury taxes should not be used with VAT. |
| Sliding and Luxury taxes | Some jurisdictions use special types of sales tax known as sliding taxes and luxury taxes. A sliding tax applies a different tax rate depending on the item's selling price. A luxury tax applies the specified tax rate to only the portion of the item's selling price that is above a defined threshold amount. |
| Item tax threshold condition | Tax rates can optionally change at retail price thresholds or at quantity thresholds. You can specify in the tax area table the condition to use when defining your rate thresholds. Assigning Tax Areas to Stores You must assign a tax area to each of your stores, so you should define your tax areas before defining your store locations in System Preferences. |
5.6.1 New Tax Area
1. To add a new tax area, in Admin Console - Node Preferences - Taxes, drill down to the desired Subsidiary. Then in the Tax Area section, click the Add button.
2. Enter the Tax Area Name you want to define. Save the changes.
5.6.2 Assign Tax Area to Store
Assign a tax area to the store record.
1. In Admin Console > Node Selection, drill down to the desired store and edit the store record.
2. Select a tax area in the Tax Area 1 drop-down. If the tax method is Sales Tax - Multi or VAT - Multi, make a selection in the Tax Area 2 drop-down.
3. Save the changes
Sample list of tax areas:
About the Taxable Ceiling
The Taxable Ceiling setting is designed to handle a special tax situation that exists in Florida (and possibly other locales). Florida law mandates a minimum sales tax rate collected by the state government. However, the law also allows each county to set its own local tax, up to the defined ceiling, that is collected on top of the general state rate. The tax applies only to the portion of the item price below the ceiling. For example, for some transactions, the county surtax only applies to the first $5,000 in the sale.
To configure taxable ceiling:
Select "Sales Tax - Multi" as the tax method.
Define a tax area for the mandated state tax and additional tax areas for counties.
When defining the country tax areas, enter the current taxable ceiling.Assign tax areas to stores.
When creating transactions at stores, the correct state and county tax is automatically applied. The county tax is applied to the portion of the item price below the Taxable Ceiling. The county tax is not applied to any portion of the price above the Taxable Ceiling
Example
A customer purchases an item in Dade County with a price of: $7,000. The total tax rate in Dade County is 7% — the 6% state tax plus an additional 1% county tax.
The State tax (6%) is applied to the entire $7,000. (7,000 *.06 = $420). The County tax (1%) is only applied to $5,000 of the price. (5,000 * .01 = $50).
Total tax charged = $470.