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Purchase orders getting issued with tax - despite vendor being Tax Exempt

J
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We have an intercompany vendor that we purchase goods from without any tax impact.

 

The vendor is tax exempt, but when we issue a PO, it is generated with tax. When we generate interco sales order, it is generated without tax.

 

Any idea why the PO would be getting created with tax? The item on the PO is a taxable item as it is taxable to the end customer.

 

 

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Best answer by jionymacabuhay 5 January 2024, 20:52

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Laura02
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Hello,

What tax zone is connected to the vendor/vendor location?  Tax Zone should be none/empty on an exempt vendor.

Vendor Location - no Tax Zone
Vendor Purchase Settings - No Tax Zone

 

Laura ~ Klear Systems, Inc. Irvine, CA. ~ Please remember to "Mark Best Answer" to help those who are facing the same problem.~
M
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Hi @jwarren 

Clear the tax zone in tax settings section under purchase settings tab and try to create the Intercompany purchase order then it will not generate tax for PO.

 

Madhu
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Hi @jwarren 

Please check once the tax id which is configured for the tax exempt category.

If the tax rate is written in the field Clear the Tax rate in tax schedule tab because of that tax will also generate.

 

Madhu
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Hello! My issue is the other way around. The Purchase Order is not generating any taxes.

Tax zone was added on the Vendor

Laura02
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Hello,

  1. Items on the PO Line need to be in a taxable tax category.
  2. Look at the category shown on the PO lines, in Tax Categories screen.  Make sure individual Tax IDs are connected to the Taxable Tax Category.
  3. Look at the individual taxes conn4ected to the Taxable Tax Category in Taxes screen.  Make sure the Tax Rate is not zero.

  4. Look at the Tax Zone in Tax Zones screen. Is the Tax ID with Tax Rate not zero connected to the Tax zone?

  5. If the vendor has more than one Location/address, make sure each Location has a proper Tax Zone.

Laura

Laura ~ Klear Systems, Inc. Irvine, CA. ~ Please remember to "Mark Best Answer" to help those who are facing the same problem.~
Laura02
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@jwarren ,

If you have checked all the tax settings mentioned, and still the tax calculates on POs, look for customizations. Do you see the same behavior on taxes when customizations are temporarily unpublished?

 

Laura

Laura ~ Klear Systems, Inc. Irvine, CA. ~ Please remember to "Mark Best Answer" to help those who are facing the same problem.~
J
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Hi Laura! Thank you for the reply. I have attached a screenshot per your item. Please check the setups that was made. Thank you so much for the help!

  1. Items on the PO Line need to be in a taxable tax category.
  1. Look at the category shown on the PO lines, in Tax Categories screen.  Make sure individual Tax IDs are connected to the Taxable Tax Category.
  1.  Look at the individual taxes conn4ected to the Taxable Tax Category in Taxes screen.  Make sure the Tax Rate is not zero.
  1. Look at the Tax Zone in Tax Zones screen. Is the Tax ID with Tax Rate not zero connected to the Tax zone?

*all GST Tax Zone ID is connected to GST Tax ID

  1. If the vendor has more than one Location/address, make sure each Location has a proper Tax Zone.

Vendor has only one Location.

 

Laura02
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Hi,

Thanks for the screen shots!  They help us to answer quickly.  In two screenshots, I’d like you to click the blue links to pop open the screen:

  1. Tax Category:  Click on TAXABLE and verify whether GST tax is included in this category.
  2. Click on Tax Zone GST AB and verify whether FST tax is connected to this Tax Zone. (step 4 above)
  3. One more thing: can you see a tax zone on the Purchase Order itself, Vendor Info tab?

  4.  

Laura ~ Klear Systems, Inc. Irvine, CA. ~ Please remember to "Mark Best Answer" to help those who are facing the same problem.~
J
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Hi Laura! Please see the screenshots. Thank you so much. We really appreciate your help.

 

Tax Category:

Tax Zone:
 

 

Yes there is the Vendor Tax Zone on the PO:

 

Is this something to do on the Tax Type?

As far as I know, there is no customization related to Purchase Order.

Laura02
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Hello,

I hope someone else will come along to help us. I can’t get tax to appear on a PO in the 2022 r2 demo using the GST tax that comes with the Acumatica demo.

I’m sorry I could not solve this question for you. Consider starting a new post in Distribution or Finance forum to cause new post email notifications to blast out. Good luck!

I compared your settings with Canadian taxes as they are set up in Acumatica Sales Demo tenant. Sales Demo shows the GST set up as VAT. Selecting VAT causes more checkboxes to appear in the Tax screen. I was unsuccessful using tax set up as VAT and tax set up as Use Tax and then I tried set up as Sales Tax.

In my tests, the tax zone does not copy from the Vendor Location to the PO Vendor Info tab. When I try to manually add the Tax ID to the Taxes tab of the PO, I get a message:

TAXABLE tax category actually DOES contain the CAGST tax.

I am not using a Project on the PO, and project preferences are not set to use project-specific taxes.  ???

 

 

 

Laura

Laura ~ Klear Systems, Inc. Irvine, CA. ~ Please remember to "Mark Best Answer" to help those who are facing the same problem.~
J
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Hi Laura! This is great! We are in 2022 R2. You were able replicate it. Yes, I will try to post this in the groups you have mentioned. Thank you so much for all the help. 

J
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Hi @Laura02  - I was able to make this work :)

I was able to add a new line for Taxes, which is the Input for the purchases

 

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