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Taxes on Service Contract Billings

  • 1.  Taxes on Service Contract Billings

    TOP CONTRIBUTOR
    Posted Dec 17, 2020 03:47 PM

    How can we handle tax when there is a Service Contract with Service Items located in multiple states? (and of course a taxable customer)

    The invoices that BC creates to bill against a service contract, are for all Service Items on the Contract. But if the customer is taxable, and some of those Service Items are in different states--or even different counties--then the tax on the invoice is going to be wrong.

    Ideas, anyone?



    ------------------------------
    Greg Enns
    ERP Coordinator
    Technical Prospects
    Appleton WI
    ------------------------------
    Digital Acceleration Binge Day.  January 28th 2021 | 11:00 AM - 2:00 PM EST


  • 2.  RE: Taxes on Service Contract Billings

    NAVUG ALL STAR
    Posted Dec 18, 2020 02:14 PM

    Greg,

    That is an ugly issue. You have a customer, say being invoiced in New York, but have specific serviceable items in PA, OH, and TX. This changes the entire Service Contract taxability crossing multi-state lines. The only solution I can think of is on the Service Item itself. Under each Service Item, setup the Ship-to Code to the specific Tax Area Code designation and whether Tax Liable. This should allow for each Item to denote Taxable and Non-Taxable under the entire Service Contract. I have not had time to test this but as with Sales Tax on Sales Order, the Ship-to address defines the Taxing State/Jurisdiction. Try this out and if I have time this weekend I will as well.

    Thank you,
    Steve



    ------------------------------
    Steven Chinsky
    Manager
    Wipfli
    Mansfield MA
    NAVUG/BC Programming Committee Member
    NAVUG All-Star, Granite Award Recipient, MCP, DCMP
    ------------------------------

    Digital Acceleration Binge Day.  January 28th 2021 | 11:00 AM - 2:00 PM EST


  • 3.  RE: Taxes on Service Contract Billings

    TOP CONTRIBUTOR
    Posted Dec 18, 2020 03:15 PM

    Thank you for helping me think through this one, Steve.

    It seems to me that as soon as you start having multiple Service Items on a document, they must have the same "Ship-To" Address, because that's how tax gets calculated. 

    Where this becomes the biggest issue for us is on the system-generated "Service Contract Invoices". This is where we bill the customer their monthly/quarterly/annual bill for the contract. NAV creates a single invoice for the contract, with 1 GL line for each Service Item on the Contract. When each of those service items are located at unique addresses--and those addresses have different tax rates--It doesn't work. :(



    ------------------------------
    Greg Enns
    ERP Coordinator
    Technical Prospects
    Appleton WI
    ------------------------------

    Digital Acceleration Binge Day.  January 28th 2021 | 11:00 AM - 2:00 PM EST


  • 4.  RE: Taxes on Service Contract Billings

    NAVUG ALL STAR
    Posted Dec 18, 2020 04:06 PM

    Greg,

    Yes, this is the big unknown, as I have not tested the theory/process, but it was a idea to look into. Given the limitation I would say that working with your Partner to write-up a customization would solve the issue, if you want to stick with a single Service Contract Invoice, with multiple Service Lines both taxable and non-taxable.

    If you need help explaining to your Partner, I am available to help you.

    Thanks,

    Steve



    ------------------------------
    Steven Chinsky
    Manager
    Wipfli
    Mansfield MA
    NAVUG/BC Programming Committee Member
    NAVUG All-Star, Granite Award Recipient, MCP, DCMP
    ------------------------------

    Digital Acceleration Binge Day.  January 28th 2021 | 11:00 AM - 2:00 PM EST


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