Managing, Editing, and Reporting Tax Items

Sales/VAT (Value Added Tax) Tax now uses Tax Items to determine the percentage to tax. It also determines the tax agency/account the tax collected is owed to.

To see the Manage Tax Items Page: Go to System Settings. Select the Navigation Bar tab. Select the +Add button. Select Action Button (not Item List). In the drop-down, select Manage Tax Items. Refresh your Centerbase homepage (not the System Settings webpage). And there is your Manage Tax Item button at the bottom of your Navigation bar!

Keep in mind, only users with Manage Tax Items permission will be able to navigate to this page. Here's what those permissions in System Settings for the user looks like.

Manage Tax Items

Manage Tax Items lets the user create/update tax items.

There are two types of tax items: Singular items and Groups (made up of multiple tax items).

Singular Items require: name, description, the tax agency (vendor object type), the tax rate in percentage form, and the bank account the tax will be allocated to.

Like Singular items, Groups require: name and description, but you’ll select multiple tax items from the Add Tax Item dropdown to fill the group. Another difference is the tax rate is the sum of the tax items’ individual rates. The tax collected will be allocated proportionally to each member.

What if a tax item is used for an invoice, then updated in the future for new tax rates? There’s a log that records the tax rate used for that invoice when that invoice was saved.

Add a Tax Item to an Invoice

If the System/Matter/Client level setting of Collect Sales Tax is enabled, there’s a tax item dropdown above the totals box when the invoice is in Edit Mode.

Selecting a tax item calculates the tax based on the rate of the tax item applied to the taxable subtotal.

Example: $800 is taxable. Therefore, $800 is the taxable subtotal that has the tax item’s rate of 6% applied to it. Giving you a total sales tax of $48.

In the case of discounts: the discount will be applied to subtotal first. Then the tax will be calculated. Any non-taxable line items will be discounted first. If there is still a discount to apply, the taxable total will be reduced by the remainder of the discount (which also reduces the tax calculated).

Once an invoice is posted, the line items and tax items cannot be changed!

Reporting VAT Tax

There’s a basic VAT Tax Report (cr_Billing_Filter/Date_VatTax) that displays: 1) How much fees you’ve collected with a tax agency set on the tax item, and 2) The tax collected into each bank account set on each different tax item. The final column is VAT Tax Collected which shows VAT tax paid for the vendor set on a tax item. Europe's VAT Tax is meant to only charge a company for the value they added to the product if they resell it.

Example: Your firm paid a vendor for an item that was taxed (tax of $10). Then they charged that to the client at an upcharge, so the tax the client paid was $11. That means they would only owe the government the difference of $1.

Here's the file for this VAT Tax Report and instructions on how to import it onto your site.