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Summary
This document outlines the process of configuring taxation in EngageIP and how taxes are applied to accounts and services. This content focuses on a native/local tax configuration (taxes applied by EngageIP without third party tax software) but the concepts and configuration details below are not exclusive to a local taxation scheme. Additional vendor specific/regional specific tax configuration content is also available in this knowledge base, links to this content can be found below:
How Taxes are Calculated
Taxes in EngageIP are calculated on each transaction and then summed up for invoicing purposes. If you take an invoice, look at the total amount and attempt to multiply that total by the tax percentage you will usually notice a one or two cent difference due to rounding. This is the expected behavior and does not mean tax calculations are incorrect. Since calculations are done per transaction when the transaction is added rounding is performed at that time and then summed up which then reflects on the invoice.
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Tax Vendors
Location: Setup menu > / Taxes section > / Tax Vendor
Tax vendors define the tax software to use, i.e. AvaTax (Avalara cloud based tax solution), Billsoft (older Avalara on-prem solution), SureTax and local (EngageIP tax engine). Each vendor is configured with a charge script, to utilize local (EngageIP) taxation you would add tax vendor with the following script:
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Tax Codes
Location: Setup menu > / Taxes section > / Tax Codes
Tax codes are configured with tax rates which are then applied to account transactions. Tax codes can be setup to be applicable to a geographic location and/or to specific services (by configuring the tax code with a service tax category) or to particular accounts (by configuring the tax code with an account tax category). The two Canadian tax codes shown in the image below are regional (applicable to the provinces of Ontario and Quebec respectively). In order for tax rates to apply for these tax codes the rates must be configured and added to the tax codes. See the Tax Rates section below for details.
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Tax Rates
Location: Setup menu > / Taxes section > / Tax Rates
Rates are configured and attached to tax codes to apply tax rates to account transactions. In the example below two taxes applicable in Quebec are configured (GST at 5% and QST at 9.975%) and one tax rate applicable in Ontario is configured (HST at 13%).
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Note: the QST rate above is rounded to four decimal places in EngageIP due a tax precision value of '4' being set on the Configuration page. |
To apply the tax rates to accounts in Quebec the rates must be added to a tax code, the tax code example below shows the attached rates in the Tax Rate Details section.
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If a service is present on an account with a service tax category it will only tax based on a tax code that is configured with a matching service tax category. For instance if you add a tax code component to an account which is configured with no service tax category and a service on the account is setup with a service tax category, the tax code set at the account level will not be selected when attempting to tax service charges related to the particular service (as the tax code's service tax category does not match the service's service tax category). In the mismatch scenario stated above the system will ignore the tax code setup directly on the account and look for another tax code that is configured with the service tax category in question and use it for taxing the service transaction.
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Note: a 'Default' tax code can be configured which will be used when the system cannot find a tax code which matches the account/service configuration. See the Default Tax Code section below for more information. |
To add Service Tax Categories to Services:
Click on Setup tab
Click Services
Click on the Service you want to add the category to
Click the Add button under Components section
Select the Service Tax Category
Click Save
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If there is no 'Tax Code' listed under an account's Details section it indicates that there is no tax code in the system that matches the account configuration. For example the account has an 'Account Tax Category' component set on it with a value of 'Corporate' but there are no tax codes setup in the system configured with an account tax category value of 'Corporate' then there is no appropriate tax code to use (mismatched tax codes will not be used, except with the special 'Default' tax code which will be used when the system fails to find a valid tax code for the account. See the Default tax code section below for more information).
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Tax codes which have address details that match the account contact address but category configurations which do not match the service tax category or account tax category will not be selected for taxation. The exception to this rule is the Default tax code (explained below).
Default Tax Code
Default is a special tax code that can be configured in the system so that it will be used when the tax configuration of the account doesn't match an existing tax code.
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Note: Note: 'Default' is case-sensitive, creating a tax code called 'default' will not work. |
The 'Default' tax code unlike other tax codes will be selected when tax code settings do not match. For instance if you have a service to tax that has a service tax category set to 'hardware' and there is no tax code in the system configured with service tax category: 'hardware' the system will check for a 'Default' tax code and tax based on its rates even if the Default tax code has no service tax category specified.
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Counties are not recorded on billing contact addresses or other contacts however they can be used from a tax code perspective to group a number of cities together without having to create a tax code for individual cities. If you create an encompassing county tax code with the city field left empty, EngageIP will do a reverse look up and if a city is associated to a county on the Setup tab page and there is a tax code with a country, state and associated county but no city, it will use that tax code.
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You can configure accounts to tax based on another account's tax configuration (the tax code they have setup, account tax category, etc.). This setting is called 'Tax Invoicer' and can be found on any account by loading the Tools menu and clicking on Invoicer. The accounts you can select must be in the account hierarchy (e.g. a parent account or owner account), you cannot select any account under the current owner.
Invoicer settings are detailed heredescribed in the Account Invoicer Configuration article.
Owner (Using Bill to Owner Configuration) / Parent / Child Applications
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User Invoicer can be defined for taxing (tax invoicer) on the tools tabpage. Tax invoicer is detailed hereThe Tax Invoicer settings are described in the Account Invoicer Configuration article.
Tax Invoicer (introduced in EngageIP 8.5.27.1): specifies which account’s tax settings to use when calculating taxes (e.g. observe the tax invoicer’s tax code, account tax category, etc.). Only accounts in the same hierarchy can be selected as a tax invoicer (i.e. parent account, owner account)
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Tax calculation for individual calls is based on call type, inbound, outbound etc. and not based on service/service tax category necessarily. For example, adding a credit using a usage service will not calculate the same tax as the original group of calls. In this case you need to use the 'tax adj' buttons (on the Transactions tabpage) to balance the account if a refund or credit is needed.
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The exact tax code used for a given transaction can also be determined by clicking on the 'ID' link on the Transactions tab page (ID '35' in the image shown at the top of this section). The edit page that loads after clicking the ID will show the tax code used under the 'Transactions' section.
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For third party tax integrations (AvaTax, SureTax): historical taxation for each transaction is stored in a TaxLog table in the EngageIP database. This table includes jurisdiction details (pcodes) used at the time of taxation for any transactions or usage billing
The Audit Log Report will capture any changes to addresses or pcodes in the objects 'ContactPointAddress' & 'ContactPointAddressAttributeJurisdictionCode'. Ensure these objects are enabled (User Audit=yes) if you need to reference the historical values of addresses
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Add Tax Category to a Child Account
Adding-AccTaxCat:
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Delete Tax Category from a Child Account
Deleting-AccTaxCat:
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