Whose Project is This?
Implementation of a software application to calculate and manage sales & use tax certainly requires support of an organization’s technical group. This is particularly true of the tasks to integrate with the ERP, order entry, and procurement systems. Nevertheless, there should be requirements at each step in the process based on tax policy. The planning, the requirements definition and the testing phases all need the involvement and the guidance of the tax department.
Unfortunately, this is not always the case. IT, and at time the software vendor, can confuse a tax professional with their technical focus. It can be difficult for technical staff to describe the process steps in terms that relate to a tax professional’s interests and concerns. It can also be difficult for the tax professional to craft questions that IT can relate to.
Often implementation of the tax engine correlates with an installation or upgrade to the ERP or host system. Typically, that project has tight timelines and budget that may not have considered any tax input at the initial planning stage, but that is exactly when the Tax Department needs to insert themselves. Being truly involved in the process can require support from an independent SME, like Toboggan Consulting, to evaluate alternatives for indirect tax calculation & management and the management of the implementation process.
Warning: Vertex O Series Taxability Mapping
Be cautious when mapping tax drivers to O Series categories. Even if you have only licensed North American tax, there are categories that actually do not apply to the tax code of states in the U.S.A. If you map to one of those "International" categories, the rule that will be applied is derived from the next category above which often is simply for TPP which will always be taxable in the U.S. or for Services which will not be taxable in most states. That is probably not what you expected and even if the result seems right for one state, it is for the wrong reason.
For example, if you map a Material or GL Account to the category “Charitable Contributions” the TPP rule will be applied and it will be taxable in all states even though no state would actually tax that category of charge.
For Sales configuration, mapping an item to any of the manufacturing or R&D categories can apply an exemption based on the items sold when the jurisdiction will require an exemption certificate.
For example, mapping a driver to Machinery and Equipment>Manufacturing Machinery and Equipment will apply exemption in all but 13 states, but an auditor won't accept the Vertex rule alone without a valid exemption certificate. For Sales, set customers as exempt with Certificates not a general item mapping.O
Warning: Vertex O Series – Reporting
If you use O Series Custom Reports, you will need to be careful in summing amounts. The O Series data model repeats each amount at every jurisdiction level so that only the Tax Amount can be easily summed correctly. Amounts other than Tax Amount: Extended/Gross, Exempt, Nontaxable and Taxable Amounts will be counted for each jurisdiction level. Typically grouping or filtering by state level will provide accurate totals. However, there are a few states where this will still not be accurate.
TENNESSEE – The single article tax applied between $1600 and $3200 is represented by an additional line for the state with both Extended and Gross Amounts in the full transaction amount and thus will double count amounts. This currently can be corrected by removing lines with Imposition Name = State Single Article Tax.
ALABAMA – There is a bracket tax for the cent amount of a sale in Alabama. O Series creates an additional line for this calculation and thus Extended Amount values will be double counted. Only using Gross Amount in totals will correct this.
IDAHO - There is a bracket tax for the cent amount of a sale in Alabama. O Series creates an additional line for this calculation and thus Extended Amount values will be double counted. Only using Gross Amount in totals will correct this.
PENNSYLVANIA- There is a bracket tax for the cent amount of a sale. O Series creates an additional line for this calculation and thus Extended Amount values will be double counted. Only using Gross Amount in totals will correct this.
O Series Version 9, SAP and Accelerator
It seems that Vertex has been suggesting that the Vertex Indirect Tax Accelerator is required for upgrade to version 9 and in particular for those upgrading to SAP S/4HANA. This is just not true. The Vertex-SAP connector (SIC) used since version 7 is fully compatible with version 9 and all SAP versions. All of the fields used in version 9 are passed in the version 7 SIC with the exception of those used in the Vertex Communication Tax product. For an initial integration, Accelerator does offer a UI based method of mapping SAP fields to O Series without the need for User Exits/ABAP programming and useful tools for setting exemptions within the SAP GUI. Also offers some new reporting. The cost should be evaluated against the new benefits and may not be worth it for most customers particularly if the project is just an upgrade of O Series and/or SAP.
Vertex Q Series – Upgrade to O Series version 9.0
Vertex continues to increase the license renewal of Q Series and at some point will expire this application and end all support and rate updates. It is time to consider upgrade to O Series to avoid risk associated with retirement and also to take advantage of the O Series benefits
· increased accuracy
· ease of maintenance
· real support for procurement
· varied deployment options to support multiple ERP’s and multiple sites
· far better troubleshooting tools
· real reporting with MS Excel output