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Microsoft Dynamics AX (Archived)

Sales & Use Tax - Vendor vs Customer in AX 2012

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Posted on by Community Member Microsoft Employee

Scenario:

Item #5395 is setup in our database with an item sales tax group of MAT.

Based on the type of project, sometimes we pay use tax on MAT items and sometimes we charge the customer sales tax.  So I have a sales tax group CA-43-U for when we need to pay use tax on it (and not charge the customer sales tax), and CA-43-S when we need charge the customer sales tax (but not accrue the use tax).

CA-43-U works beautifully and accrues the use tax.  But CA-43-S not only wants to charge the customer sales tax (which is correct), but it also wants to pay the vendor sales tax - causing our AP dept to constantly override the sales tax amount at the invoice level.

I tried to create a new sales tax group of CA-43-R (resale) - which doesn't want to pay the vendor sales tax (good), but then it doesn't want to charge the customer sales tax (bad).

Any suggestions?

Note:  we don't have any groups at the vendor or customer level because based on where the project is located, there may or may not be sales or use tax. 

*This post is locked for comments

  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 291,280 Super User 2024 Season 2 on at
    RE: Sales & Use Tax - Vendor vs Customer in AX 2012

    Hi Sonya,

    If the answer helped  you, please mark it, so the question will get the status answered and other people with the same question can benefit from it.

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Sales & Use Tax - Vendor vs Customer in AX 2012

    You are absolutely correct - thank you.  :)  I had no idea there were two tax groups on the PO line - and the one that the buyers were changing was the one effecting the customer invoice.  Thank you much!  :)

  • Verified answer
    André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 291,280 Super User 2024 Season 2 on at
    RE: Sales & Use Tax - Vendor vs Customer in AX 2012

    Hi Sonya,

    When you enter purchase orders, on the line details you can specify Project - sales tax fields (tab Project). These two are used when you need to charge your customer from a project. Can you check these values if they are correct?

    The Sales tax fields on the General tab are used for the incoming transactions.

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Sales & Use Tax - Vendor vs Customer in AX 2012

    It's not a system error - I'm wondering if I don't have things setup correctly.

    For example, on a T&M project, I purchased (5) XYZ item #s on a PO - I used a sales tax group on the PO line so it wouldn't accrue use tax or pay the vendor sales tax when we enter the vendor invoice.

    Now I need to bill my customer for those transactions, but the sales tax group being applied to the invoice is being carried over from the PO line - so it doesn't want to charge my customer sales tax.

  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 291,280 Super User 2024 Season 2 on at
    RE: Sales & Use Tax - Vendor vs Customer in AX 2012

    Hi Sonya,

    If you get an error, please share the error message and/or a screenshot. Otherwise please explain where you get stuck as the purchase and customer invoicing is quite separated.

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Sales & Use Tax - Vendor vs Customer in AX 2012

    I think it comes down to me not wanting to pay sales tax to a vendor on a PO line (nor accrue any use tax), but on a T&M project, I want to charge the customer sales tax on the line that came from the PO?

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Sales & Use Tax - Vendor vs Customer in AX 2012

    Thank you for the validation!  It seems like it can get pretty complex at times.  :)

    On a T&M project, and we have issued a PO to the vendor so that the lines are exempt (no use tax accrual, no sales tax to vendor)...but then we go to bill that transaction, and because the tax group was exempt, the system won't allow me to bill the customer for sales tax on it.  I wasn't sure if I needed to change the setup a bit?

  • Suggested answer
    André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 291,280 Super User 2024 Season 2 on at
    RE: Sales & Use Tax - Vendor vs Customer in AX 2012

    Hi Sonya,

    Use Tax is setup different for customers and vendors. In our country we can sell and purchase goods. Depending on domestic or foreign there is use tax or not. When it is domestic, we have to charge sales tax or get charged; otherwise it is use tax.

    For purchasing goods abroad we have to use the option on Sales tax groups to indicate it is use tax. Then the sales tax will be calculated and accrued.

    On the sales side the sales tax group option Exempt is used. In that case the sales tax is not calculated.

    Per project you can setup a Sales tax group, which is only used for invoicing the customer. When you create purchase invoices the Sales tax is not taken from the project, but the vendor only. You can use different sales tax codes for purchasing and the sales to solve your problem.

    I don't know your complete setup, but it look like the use of your mentioned three Sales tax groups (and selecting the correct one on postings) will be sufficient.

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Sales & Use Tax - Vendor vs Customer in AX 2012

    Hi Sonya,

    can you expand on your issue, possibly adding some debit/credit Accounting example?

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