Microsoft Dynamics GP Sales Tax - More Detail

I was sent an email recently from someone who ready my January Post (link below) regarding Sales Tax Calculations.  The email requested more information on the following section of the blog:

If the item is going to be delivered to the customer, AND the tax was setup with the item, we charge based on the tax details that are common in both the Item tax schedule AND the customer’s tax schedule.

 Original Blog Post:

http://saci.com/blogs/belinda-the-gp-csi/bid/141325/Microsoft-Dynamics-Sales-Tax-Setup-Overview-video

 My Response:

Ok let’s get theoretical. 

 Item Setup:

Let’s say you have an item in inventory that is taxable only for the state sales tax amount but not the local sales tax amount.  You would create a tax schedule that includes only the state detail.  This means that you need to have the state sales tax detail entered separately from your local tax detail.

 Customer Setup:

You have a customer that lives in your local area and they are not tax exempt.  So for the customer you would use a tax schedule that includes both the state detail and the local detail.

 Tax Calculation:

So when you sell this item to this customer, the only tax that would be calculated would be the detail that they share in common, which would be the state tax.

 Caveat:

This would only exist if the item is set with the Sales Tax Option as Taxable.  If it is set to Non-Taxable, no change is charged regardless of how the customer is setup.  If it is based on customers, all the details assigned to the Tax Schedule on the customer gets charged. 

Thanks for asking Tim!  (That is not Tim in the picture, the picture is from the 2013 Microsoft Dynamics Convergence in New Orleans, LA.)