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Dynamics 365 Community / Forums / Microsoft Dynamics GP (Archived) / Can GP SOP be setup so...
Microsoft Dynamics GP (Archived)

Can GP SOP be setup so that Tax is charged on the amount before discount?

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Posted on by Community Member

I sell something for $2.00 with a 50% discount for a net selling price of $1.00. Can GP be setup to calculate taxes on the full $2.00 and still show it all on one line. I know I could do a non-taxable credit line but that sort of defeats the purpose.

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  • Dan Liebl Profile Picture
    Dan Liebl 7,320 on at

    I know of no way to do this as it takes the extended price.   I believe your choices would be your idea or look into a custom.    You could also check on some of the ISV that do tax such as Avatax or CCH, but I don't think that changes the way it would tax.  

    Dan Liebl, CMA CPIM

    OTT,Inc

    dliebl@OTT-inc.com

  • Community Member Profile Picture
    Community Member on at

    Thank you, that is what I thought. I could do an invocie in crystal that would display correctly but the taxes would need to be changed manually on the actual invoice.

  • Community Member Profile Picture
    Community Member on at

    OK I have more information. They offer a discount for prompt payment that needs to show up on the invoice. The tax needs to be on the full amount and the discount shows on the Trade Discount line below the sub-total.  Is there a way to exclude the Trade Discount from the tax calculation?

  • Community Member Profile Picture
    Community Member on at

    Are you saying that when the invoice is entered, there is an amount put in the trade discount field that represents what the discount would be if the customer pays promptly?

    So, you are showing the settlement discount on the original invoice, before you get paid?

    What happens if the customer pays late? They are going to pay th Invoice amount (which includes he discount).

    Or am I on the wrong track altogether?

    Have you looked at using Settlements Discounts?

    The Invoice would be entered for the full amount *no trade discount) - but when the cash is received, if it is on time, gp will apply the settlement discount.

    Ian.

  • Community Member Profile Picture
    Community Member on at

    The issue is that the CUstomers are used to seeing the discount amount on their invoice. The discount they are getting is really not time sensative. They will tkae it no matter how late they pay.

  • Community Member Profile Picture
    Community Member on at

    Understood. Its not really an issue of early payment - its whether or not you can stop the Sales tax amount being changed when you enter a trade discount amount.

    The answer is no, but you can always overwrite the default tax amount that is calculated by GP after you enter the discount (with the pre discount Tax amount).

    Or if the discount percentage is the same every time, you could work out a Tax Detail percentage (that when applied to an amount that is discounted by say 10%, it calculates the sales tax on the original 100%)

    so if your actual sales tax percentage is say 20%...you end up with maybe 22%. Put this in the Tax Detail record and it will default every time.

    I don't think this would pass a tax audit though!!

    Is this the correct legal way to handle this though? A trade discount is applied to the gross sale amount and so is reckonable for tax purposes. The fact is it is not a Settlement Discount - the customer gets it no matter when they pay - this is a straight trade discount whatever way you look at it.

    Hope this helps.

    Ian.

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