FAQs: Applying Invoice Taxes

Some libraries need the ability to report tax amounts separate from purchase prices on invoices. Libraries may also need the ability to report how much taxes they pay, since some of these libraries may receive financial credits or refunds from the government agencies that levied the taxes.

SirsiDynix Symphony’s Invoice Tax features support these needs by reporting from invoices on purchase totals, tax subtotals, tax totals, and invoice totals. As invoices are created or modified, users can specify how invoice taxes and/or tax rebates are applied, using SirsiDynix Symphony’s tax structure and tax handling map policies, and which funds are used to pay these taxes or receive the tax refund amounts.

Policies to define

The following policies control the application of invoice taxes. These policies display only when Invoice Tax features are configured.

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Acquisitions Tax Policy – Allows you to define the attributes of the individual taxes applied to invoices.

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Tax Structure Policy – Allows you to combine multiple taxes and tax rebates on an invoice. A tax structure can include up to three individual taxes (Tax 1, Tax 2, and Tax 3).

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Tax Handling Map Policy – Defines how taxes are to be applied to invoice lines.

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Acquisition tab policies in the Global Configuration wizard Enables or disables the use of zero rated tax, tax rebates, vendor tax exemptions, and tax included in invoice line amounts. See Global Configuration Wizard for information.

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X12 Library Tax Policy – If you use X12 Invoicing, configure the X12 Library Tax policy to map an invoice library to a tax structure, so that when invoices are created using the X12 invoice loader (used by the Serials X12 Invoices and Book X12 Invoices reports), the correct tax structure is applied to the newly created invoice/invoice lines.

Typical invoice tax work flows

There a two methods of applying invoice taxes.

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Link tax and tax rebate amounts to default tax fund – Similar to linking an invoice line to a fund, this method is used when all taxes are charged to a Tax fund, and/or tax rebates are applied to a Tax fund.

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Link tax and tax rebate amounts to order funds or default tax fund – Similar to adjust invoice lines, this method charges taxes and/or applies tax rebates to the fund(s) invoiced on the order.

Additionally, you can create invoices with taxed and non-taxed invoice lines. On the same invoice, you can create invoice lines for taxed materials, invoice lines for lines that are tax exempt or are zero rated, and invoice lines for tax rebate amounts.

Some sites will pay taxes to the vendor, but other sites prefer to allow tax to accrue, then pay the tax directly to the government agency that levies the tax. When an invoice is created, the setting of the Tax Paid to Vendor field in the vendor record is used for the setting of the Tax Paid to Vendor field in the invoice. The Tax Paid to Vendor field in the invoice can be modified independently as needed. The setting of the Tax Paid to Vendor field in the invoice determines whether tax rebates are paid by the vendor or by the government agency.

Process for adding invoice taxes

When adding an invoice with the Add Invoice wizard or with the Add Invoice for Order helper in the Receive Orders wizard, the Enter Invoice ID and Vendor ID window requires you to select the Tax Structure policy that will apply to the new invoice. In the new invoice’s Invoice tab, the Tax Paid to Vendor field is set to match the corresponding field in the vendor record. If the Tax Exempt Vendor and Tax Included in Invoice Line Amounts fields are available, these fields are set to match the settings of the corresponding fields in the vendor record. Each of these fields on the Invoice tab can be modified before or after the invoice information is saved.

In the Modify Invoice wizard, you can change the tax structure applied to the invoice by selecting a different tax structure on the Invoice tab. You may also modify the settings of the Tax Paid to Vendor, Tax Exempt Vendor (if available), and Tax Included in Invoice Line Amounts (if available) fields on the Invoice tab.

Once the tax selections are made, as you create and modify invoices, the appropriate taxes and tax rebates can be entered from the keyboard, or automatically applied.

Automatically adding tax and tax rebate invoice lines

In Acquisitions Session Settings, you can select the default property Calculate Invoice Taxes Automatically. When you select this default property, the Tax Calculated flag is set to Y when you create an invoice. As you create an invoice line, a tax invoice line and/or a tax rebate invoice line (or multiple lines, if multiple taxes are applied) with the appropriate tax or rebate amount or will be added unless the invoice line is exempt from a particular tax, or if a tax is a zero rated tax. When the invoice line is created or modified, the corresponding tax invoice lines and tax rebate lines will be updated.

If you select the Calculate Invoice Taxes Automatically property, you are required to select a Tax Calculation Method and a Default Tax Fund.

In Acquisitions Session Settings, the Default Tax 1 Handling, Default Tax 2 Handling, and Default Tax 3 Handing properties specify the default tax handling for SirsiDynix Symphony to use when creating tax invoice lines and/or tax rebate lines in which no acquisitions material type is specified. These properties specify how each tax or tax rebate of the tax structure selected for the invoice is to be applied to invoice lines.

The acquisitions material type and the Default Tax Handling properties are used as follows in determining the tax handling for invoice lines.

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If the orderline linked to the invoice line contains an acquisitions material type, the invoice line inherits the specified acquisitions material type. The user can change the acquisitions material type on the invoice line, if needed. The acquisitions material type in the invoice line is then used to find the applicable line in the Tax Handling Map policy to determine the correct tax handling for that invoice line.

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If the acquisitions material type is not specified in the invoice line, but the Default Tax 1 Handling, Default Tax 2 Handling, and Default Tax 3 Handing properties are set, the property settings determine the correct tax handling for the invoice lines.

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If the acquisitions material type is not specified in the invoice line, and the Default Tax 1 Handling, Default Tax 2 Handling, and Default Tax 3 Handing properties are not set, the standard tax handling is used for the invoice lines.

When SirsiDynix Symphony calculates tax and/or tax rebates automatically, the tax invoice lines and tax rebate invoice lines will have native calculated tax, native calculated tax rebate, calculated tax, and calculated tax rebate amounts populated, in addition to the total amount (vendor final price). This indicates that an invoice line is system-generated and maintained.

When invoice lines are displayed, the Calculated Tax, Tax Rebate (if available), Native Calculated Tax, and Native Calculated Tax Rebated (if available) fields (if ordering in foreign currencies) display these values, but cannot be modified.

The Amount field can be modified if the Allow Edits to Amount Field in System Calculated Tax Invoice Lines property is selected in the Session Settings wizard, allowing for correcting rounding discrepancies.

When an invoice has the Tax Calculated flag set to Y, and you change the Amount field on an invoice tax line or a tax rebate line, taxes and tax rebates will no longer be calculated automatically for the invoice. Once you manually change a previously-calculated tax or tax rebate amount, the Tax Calculated flag is set to N, and you must manually maintain the invoice tax line and tax rebate line information for the invoice.

If the Calculate Invoice Taxes Automatically check box is selected in Session Settings, and the specified default tax fund does not exist or is overencumbered, the text “(Error calculating tax lines)” displays with the message text stating that the fund does not exist or the fund exceeded its expenditure limit. Invoice lines for taxes and tax rebates cannot be automatically created, and you must correct the default tax fund selection before the invoice can be created and/or invoice lines can be added.

Automatically adding invoice lines for taxes and tax rebates paid from or to a fund

The Link Tax Amounts to Default Tax Fund (Tax/Fund and Rebate/Fund) tax calculation method is used for taxes and tax rebates that are paid or received directly by a specified fund. Amounts linked to Tax/Fund and Rebate/Fund are designated as tax amounts and accumulate in invoice tax totals.

If the Calculate Invoice Taxes Automatically check box is selected in Session Settings, and the default tax calculation method is set to Link Tax Amounts to Default Tax Fund, one or more tax invoice lines and/or tax rebate invoice lines are added automatically as the first invoice line is created. The fund that is specified in the Default Tax Fund field in Sessions Settings is used for the tax invoice lines and tax rebate invoice lines.

Automatically adding invoice lines for taxes and tax rebates paid from or to funds designated in the orderline

The Link Tax Amounts to Order Funds or Default Tax Fund (Tax/Adjust and Rebate/Adjust) tax calculation method is used for taxes and tax rebates that are paid or received using the funds designated in the orderline being taxed. Amounts linked to Tax/Adjust and Rebate/Adjust are designated as tax amounts and accumulate in invoice tax totals.

If an invoice was created with the Tax Calculated flag set to Y, and the default tax calculation method is set to Link Tax Amounts to Order Funds or Default Tax Fund, one or more tax invoice lines and/or tax rebate invoice lines are added automatically as each invoice line is created. How the tax and tax rebate invoice lines are added depend on the invoice link type you select when you create an invoice line.

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If you add an invoice line linked to ORDER or ADJUST, one or more tax lines linked to Tax/Adjust and/or tax rebate lines linked to Rebate/Adjust are added automatically. One tax or tax rebate line is added for every tax or tax rebate specified in the tax structure for the invoice that is not exempt. Each tax or tax rebate line is linked to the same orderline as the invoice line you created.

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If you add an invoice line that is linked to FUND, Copy Prorated, Line Prorated, or Price Prorated, one or more tax lines linked to Tax/Fund and or tax rebate lines linked to Rebate/Fund are added automatically. One tax or tax rebate line is added for every tax or tax rebate specified in the tax structure for the invoice that is not exempt. Each tax or tax rebate line is linked to the tax fund that is specified in the Default Tax Fund field in Session Settings.

Automatically updating tax invoice lines

Automatically calculated taxes and tax rebates are updated in the following instances.

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When you change an invoice line amount, the tax and/or tax rebate is recalculated.

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When you change tax handling, the tax and/or tax rebate is recalculated.

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When you remove an invoice line, the tax and/or tax rebate is recalculated.

Note: If you delete a taxed invoice line that has tax invoice lines and/or tax rebate invoice lines associated with it, you must manually delete the tax and tax rebate lines from the invoice. The tax and tax rebate lines are not automatically removed when you delete an invoice line that is taxed.

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When you change the tax structure on an invoice, the following happens.

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Any existing Tax/Fund, Tax/Adjust, Rebate/Fund, or Rebate/Adjust lines are removed from the invoice.

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Automatically generated Tax/Fund, Tax/Adjust, Rebate/Tax, or Rebate/Adjust lines are recreated, according to selections in Session Settings.

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Any tax exemptions used by the previous tax structure but not used in the new one are set to Exempt. For example, if the original tax structure used standard tax handling for Tax 1 and Tax 2, but the new tax structure has Tax 1 only, the tax handling for Tax 2 is set to Exempt in all invoice lines.

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You are prompted to check each invoice tax line to see if tax exemptions for the new tax structure should be modified. In each invoice tax line, the Tax Handling fields are set to Exempt or Standard according to the Tax Handling Map line that applies the newly-selected tax structure. To change tax handling settings, you must select a value in the Tax Handling fields on invoice lines; you cannot modify the Tax Handling fields on automatically generated invoice tax lines.

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When you change a vendor’s tax exemption status, SirsiDynix Symphony adjusts invoices accordingly.

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If the Tax Exempt Vendor setting is changed in the vendor record, existing invoices are not affected.

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If the Tax Exempt Vendor setting in the invoice is changed from Y (yes) to N (no), and the Invoice Tax feature is configured to calculate taxes automatically, tax and/or tax rebate invoice lines will be automatically added to the invoice.

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If the Tax Exempt Vendor setting in the invoice is changed from N (no) to Y (yes), and the invoice contains tax and/or tax rebate lines, all tax and tax rebate lines are removed from the invoice. The invoice totals are recalculated, and funds originally specified in the tax and tax rebate lines are adjusted. Users are prompted to confirm the removal of the tax and tax rebate lines before the invoice is modified.

Updating invoice tax lines using the Invoicing tree

In the Add Invoice for Order and Add Invoice Lines for Order helpers, as well as the Create Invoice Lines for Order helper, you have the option of selecting the Allow Selection of Orderlines for Invoicing option in wizard properties. Selecting this option results in displaying the Invoicing tree, where the order is displayed in a tree format, and in the view pane you can review the order information before creating invoice lines.

When using the Invoicing tree, if Invoice Tax features are configured, as you add new invoice lines, the tax invoice lines and tax rebate invoice lines will be updated on the invoice.

Process for making an invoice line tax exempt

When adding an invoice line or modifying an invoice line, if Invoice Tax features are configured, you can indicate whether the invoice line is exempt from Tax 1, Tax 2, and/or Tax 3 by selecting Exempt in the appropriate Tax Handling field(s). Tax 1, Tax 2, and Tax 3 names and values are defined in the Acquisitions Tax policies. It is possible for an invoice line to be exempt from some taxes, but not others. For example, the invoice line may be exempt from state tax (Tax 3) but not local or city tax (Tax 1). Further, labels used in invoice wizards make use of the Acquisitions Tax policy names. For example, instead of Tax 1 Handling, you might see a field labeled “STATE Handling.”

You can select the Tax Exempt property in the Invoice Lines Defaults to create tax exempt invoice lines by default when tax lines are created manually with the Add Invoice wizard and the Add Invoice Lines wizard. This check box is cleared by default. This wizard property does not affect the tax exemption settings for tax invoice lines created automatically.

Invoicing tax exempt vendors

If the Vendor Tax Exemptions policy in the Global Configuration wizard is set to Use Vendor Tax Exemptions, vendor records include the Tax Exempt Vendor setting to specify whether the vendor has a tax exempt status. If a vendor has a tax exempt status, materials ordered from the vendor are not subject to taxes. When an invoice is created, the Tax Exempt Vendor field on the Invoice tab of the invoice inherits the value of the Tax Exempt Vendor setting in the vendor record. If the vendor has a tax exempt status, no tax lines and/or tax rebate lines will be added to the invoice, and tax and tax rebate invoice lines cannot be added manually to the invoice with the Add Invoiceline tool or wizard.

Effects of changing a vendor’s tax exempt status

If a vendor’s tax exemption status changes, you can edit the setting of the Tax Exempt Vendor field using the Modify Vendor wizard and the Modify Invoice wizard. SirsiDynix Symphony does the following.

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If the Tax Exempt Vendor setting is changed in the vendor record, existing invoices are not affected.

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If the Tax Exempt Vendor setting in the invoice is changed from N (no) to Y (yes), and the invoice contains tax and/or tax rebate lines, all tax and tax rebate lines are removed from the invoice. The invoice totals are recalculated, and funds originally specified in the tax and/or tax rebate lines are adjusted. You will be prompted to confirm the removal of the tax and tax rebate lines before the invoice is modified.

Vendor tax exemption conflicts

If the Tax Exempt Vendor check box is selected in the Invoice tab when the invoice is created or modified, and the Tax Paid to Vendor check box and/or the Tax Included in Invoice Line Amounts check box is also selected, the following message displays when you try to save the invoice.

The vendor tax exemption conflicts with other vendor tax fields.

If the Tax Exempt Vendor check box is selected, the Tax Paid to Vendor check box and the Tax Included in Invoice Line Amounts check box must be cleared because they do not apply to a vendor who supplies ordered materials that are exempt from taxes.

If the Tax Exempt Vendor check box is cleared (meaning the materials ordered from the vendor are subject to taxes), then the Tax Paid to Vendor check box and/or the Tax Included in Invoice Line Amounts check box can be selected.

Automatic tax calculation for tax included in invoice line amounts

Some vendors send invoices in which the line item amounts include tax. If your library orders materials from such a vendor, set the Tax Included in Invoice Line Amount global property to Use Tax Included in Invoice Line Amount. If SirsiDynix Symphony is set up to automatically calculate tax invoice lines, you should modify the vendor’s vendor record and select the Tax Included in Invoice Line Amounts check box. When you create an invoice using the Add Invoice wizard or Add Invoice for Order helper, the invoice inherits the setting of the Tax Included in Invoice Line Amounts check box in the vendor record. As you add invoice lines to the invoice, you are prompted to enter the invoice line amount that includes tax in the Amount Including Tax field. The Amount Including Tax field specifies the vendor final price including tax. SirsiDynix Symphony will do the following when automatically calculating taxes on the invoice line.

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If the tax handling for all of the taxes (Tax1, Tax2, and Tax3) on the invoice line is set to Exempt or Zero Rated, SirsiDynix Symphony does not add any tax invoice lines. The Amount Including Tax field (vendor final price including tax) and the Amount field (vendor final price) will contain the same value.

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If the tax handling for any of the taxes (Tax1, Tax2, or Tax3) is set to Standard or Rebate, SirsiDynix Symphony takes the value you entered in the Amount Including Tax field and determines how much of the amount is the vendor final price and how much is tax. SirsiDynix Symphony then creates Tax/Fund, Tax/Adjust, Rebate/Fund, or Rebate/Adjust invoice lines with the proper tax and tax rebate amounts according to the settings in the Acquisitions Session Settings wizard and policies.

Reporting taxes

Invoice reports display selection options for the tax fields on the Invoice Selection and Invoice Line Selection tabs. You can make selections by vendor tax totals, native tax totals, tax amounts paid, tax structure policy, tax rebate totals, and more. The List Vendor Invoices report lists invoices by vendor and invoice totals for each vendor. Invoice tax information is included in this report.

When multiple taxes are applied to one invoice, invoice reports will determine both the total tax and separated tax amounts; for example, provincial sales tax amounts separate from the value added tax amount. SirsiDynix Symphony reports on tax amounts on invoice totals or on purchase price or tax amounts by tax type.

For invoice reports that can be set up to print tax information, exemption information for up to three taxes on each invoice line may display in the report output.

In Acquisition group reports, the policy list gadget in the Tax Handling selection field will display Rebate (for tax rebate) and Zero (for zero rated tax) in addition to Standard and Exempt as selection options regardless of the settings of Tax Rebates and Zero Rated Tax policies on the Acquisition tab in the Global Configuration wizard.