TaxJar Integration and Sales Tax Setup
Summary
Numerous changes have been made to Sales Tax logic in WinNetStar to better facilitate collecting sales tax in states where you have economic nexus. Changes include a new table for you to list the states in which you have economic nexus as well as the ability to configure the taxability of the things you sell, and the tax status of the customers that you sell to, on a state-by-state basis. In addition, WinNetStar is now integratedwith TaxJar, a third-party tax calculator, that will allow you to set up an account and utilize the TaxJar API’s to calculate sales tax.
TaxJar Introduction and Benefits
Your business is required to collect and remit sales tax in any state where you have Nexus. Nexus can be defined as a physical presence in a particular state or it can be defined as Economic Nexus which is based on the volume of sales that you have in any particular state. Each state has it’s own rules for determining nexus. Inaddition, each state has it’s own rules and requirements for how to calculate,collect and remit sales tax. Keeping track of all of this is a daunting task for any business, accordingly, WinNetStar now offers an integration with a third-party sales tax vendor, TaxJar, to assist you with your sales tax compliance. This integration can assist you in thefollowing areas:
· Identifying states where you have Economic Nexus,
· Real time calculation of sales tax based on ship to address
· State Reporting and Filing
This document will walk you through the steps you need to take to establish an account with Tax Jar and configure various options within WinNetStar to get the best custom solution for your business. You can learn more about Tax Jar and their pricing here: www.taxjar.com.
A chart displaying the Economic Threshold by State for achieving Nexus is available from the following link, however, you should always confirm this information from each state’s official sales tax website: www.salestaxinstitute.com/resources/economic-nexus-state-guide
Establishing an Account with Tax Jar
Your first step in this process will be to create a new TaxJar account. Please contact RIMSS customer support for assistance. Once your account is active, we will assist you with filling out the screen shot below that is only accessible to RIMSS support.
Within WinNetStar, we will navigate to Company>CompanyPreferences and click on the TaxJar tab. Once you have created an account, we will assist you in retrieving yourTaxJar API Token.
Once we have a token, we will enter it by clicking on the button labeled Enter TaxJar API Token. This will produce a pop-up window where we will enter your token and click on the OK button. The token you enter is validated by WinNetStar during this process and after it is validated will display on the main screen.
Check the box “Enable TaxJar API Calculations” if you want to use TaxJar to calculate sales tax for ANY of your transactions. You will have other WinNetStar related configuration options allowing you to customize this by state, but if you wantto use TaxJar for even one state, this box must be checked.
Check the box “Enable TaxJar Reports” if you want to useTaxJar sales tax reporting for ANY of your transactions. You will have other WinNetStar related configuration options allowing you to customize this by state, but if you want to use TaxJar for even one state, this box must be checked.
State by state customization options are discussed in more detail later in the WinNetStar Configuration section of this document.
On this screen you can also perform the following functions:
View Nexus Regions – click this button to display the Nexus Regions (states) that you have set up in TaxJar.
Update Product Categories – click this button to update yourWinNetStar database with TaxJar Product Codes that can be assigned to eachthing you sell. Product Codes arediscussed in more detail later in this document.
Update Backup Tax Rates – click this button to update your WinNetStar database with TaxJar’s average tax rates by state that will be used in the rare event that you do not have connectivity to TaxJar.
WinNetStar Configuration
Each location within your company will have the option touse either RIMSS or TaxJar for its sales tax calculations on a state-by-state basis with options for Ship to Sales only, or both Ship to and Non-Ship to Sales (over-the-counter). In addition, if you choose to use TaxJar for the calculation, you have the option to use RIMSS in determining the Taxable Status of the transaction. The screen below is available to RIMSS personnel only and will be configured with the options that you select.
Some dealers may only want to use TaxJar for ship to sales since sales tax related to over-the-counter sales is fairly straight-forward and you likely have your taxable status set up and working correctly. Because TaxJar does not recognize an AgExempt status (Customers are either taxable or not based on the customer’s taxstatus of Taxable or Tax Exempt), you should use RIMSS to determine tax status for sales in those states where you want to continue to not charge sales tax to your Ag Exempt customers. When you are using TaxJar to calculate the tax but using RIMSS to determine tax status, if your customer is set up as Non-Taxable (typically meaning they are Ag-Exempt) we send a generic non-taxable product code to TaxJar via the API that tells them not to calculate tax on that line item (unless the item is set up in RIMSS as Always Taxable).
Nexus State Tax Group – this column in the screen shot above provides a drop down of WNS Tax Groups for you to select when you want to override the TaxJar API with the selected tax group. You should consider doing this when you have nexus in a state but all ship to sales in the state will have the same tax group. See two examples below. This is an important feature to consider asit will reduce the number of API calls to TaxJar, but you must be certain thatyou only use it when appropriate.
· Example One - The state where you have physical nexus is an origin-based sales tax state such that all of your ship to’s in that state would use your location default sales tax group rather than a sales tax rate derived by the ship to address.
· Example Two - You have economic nexus in a state but that state allows all remote sellers to use the same sales tax rate regardless of ship to address. In this instance, you could create a new Tax Group for that state and select it here.
Omit Reporting API – Check this box if you wish to NOT report invoices sold into a particular state using the TaxJar reportingAPI. For example, you may only want touse the reporting API for those states that you do not have nexus so that your TaxJar dashboard can alert you when you achieve nexus. Once you have achieved nexus, you could select this option to reduce the number of TaxJar API calls. Please note that selecting this option will also disable the ability for TaxJar to file your return in that state.
Nexus by State
Navigate to Company>Sales Tax>Nexus by State to viewthe screen below. You will need to select the states in which you have Nexus. These selections affect the way sales tax logic applies sales tax toship to sales. You will also need to usethe drop down to select a Sales Tax Group for the system to use when you are shipping to a state in which you have No Nexus. We recommend that you create a new Sales Tax Item named No Nexus Stateswith a tax rate of zero and put this Item into a New Sales Tax Group named NoNexus States to use for this purpose.
You will also be required to select your Nexus states in TaxJar. The selections here must match the selections you are making in TaxJar. If you are making a sale into a state where you have indicated that you have No Nexus, the system will not call the TaxJar API for the tax calculation,rather, it will use the new No Nexus tax group that you will set up and selectin the drop down seen in the above screen shot.
TaxJar Product Codes and Shipping Charges
TaxJar uses Product Codes to help determine taxability of the things you sell. When using TaxJar you can assign a TaxJar Product Code to everything you sell including, parts, wholegoods, miscellaneous charges, labor, rental charges, and lease charges. As part of the onboarding experience, TaxJar personnel will provide guidance regarding which product codes to use for the various things you sell. There are drop down boxes for these product codes throughout the systemthat facilitate this process. Assigning a Product Code is not required – if no code exists, TaxJar treats the item as taxable.
Shipping
Taxability of shipping varies from state to state and the TaxJar API requires that we specifically identify the shipping charge on a document. This is facilitated by checking the API Shipping box on the miscellaneous charge that you wish to use as seen below. Only one miscellaneous charge can be selected and this must be done for each location.
Sales Tax Agency Suppliers
You will need to have a Supplier Master Record for each state set up with the Supplier Type of Sales Tax Agency. In addition, each of these master records should also be linked to the two-character state abbreviation used by TaxJar when providing the sales tax amounts and respective tax jurisdictions. This linking process is performed by navigating to the Details tab of the Supplier Master and first setting the Supplier Type to Sales Tax Agency. After selecting this supplier type a new drop down will appear allowing you to select the two-character state abbreviation as seen in the image below:
Customer Tax Status by State
A new tab has been added to the Customer Master to allow a user to override the customer’s tax status on a state-by-state basis. The default value is None. When None is selected for a state on this screen, the system will use the existing tax status for the customer that youhave set up on the Details tab of the Customer Master.
Multi-State Tax Profile
Similar to the Customer’s tax status by state, you also have the ability to set the tax status of the things you sell by state. Navigate to Company>Location SupportList>Multi-State Tax Profiles to find the screen below.
The above screen is a list of your Multi-State Tax Profiles. Double click a line to open the Profile for editing, or click Add New to create a new Profile as seen in the image below.
Once you have created a Profile, it can be assigned to the things you sell in various places throughout the system via a drop-down box selection. If no override exists for an item being sold, the system will use the default tax status for the item that already exists.
Kubota KCom Customer Tax Status
Kubota KCom orders coming into WinNetStar include the tax status of the customer as set up in the KCom customer profile. We are required to ignore the customer’s tax status in WinNetStar and instead use the tax status received from KCom. This KCom tax status is communicated as a code, exemption number and expiration date. The code represents the type of exemption and you must map each potential code to one of the 3 tax statuses used by WinNetStar for each state you have nexus. To perform this mapping,navigate to Company>Sales Tax>KCom Customer Tax Status. This will produce a pop up as seen below.
Sales Tax Detail Report
Sales tax calculated by TaxJar will show up in the Sales Tax Detail Report with a Tax Group name of TaxJar or TaxJar Tax. TaxJar Tax will signify that the TaxJar API was unavailable and the locally stored average rate by state table was used for that transaction. The Sales Tax Agency for TaxJar transactions will display based on the linked Supplier Master as described above in the section titled Sales Tax Agency Suppliers.
Pay Sales Tax
You will use the Pay Sales Tax function as you always have for all states regardless of your selected options for how the sales tax was calculated and or filed.
Triggering TaxJar API Calls
WinNetStar performs a sales tax calculation each time you click on the Subtotal button on a document as well as each time a document is saved. For those states where you have selected to use TaxJar as your sales tax calculator, we make a call to theTaxJar API for each calculation. The way you use the WinNetStar system can therefore impact the number of TaxJar APIcalls.
For instance, if you open a previously saved sales order for review, make no changes and then click on the x in the upper right-hand portion of the form, you will not create an event that calls the TaxJar API. However, if instead you choose to close that sales order screen by clicking on the Save and Close menu option, you will becreating an unnecessary call to the TaxJar Sales Tax API. Similarly, if you click on the Subtotal button on a document each time you add a new line you will incur more TaxJar APIcalls versus waiting until all lines have been added.
A separate TaxJar API is used to report a final sale. This API is called each time an invoice is settled and or voided.