How to Change Sales Tax Rate in Sage 100

Accessing Sales Tax Configuration

To begin modifying sales tax rates in Sage 100, you'll need to access the appropriate module:

1. Navigate to Library Master > Setup > Sales Tax Code Maintenance
2. Enter your administrative credentials if prompted
3. The Sales Tax Code Maintenance window will appear, where you can make necessary modifications

Understanding Tax Components

Before making changes, it's essential to understand the three automatic tax classifications in Sage 100:

• Nontaxable (NT)
• Taxable (TX)
• Taxable Freight (TF)

These classifications are system-defined and cannot be deleted, serving as the foundation for all tax calculations in the system.

Step-by-Step Rate Modification Process

1. Modifying Existing Tax Codes

1. In the Sales Tax Code Maintenance window, locate the tax code you wish to modify
2. Enter the new tax rate percentage in the Tax Rate field
3. Verify the Sales checkbox is selected for sales tax calculation
4. Click Accept to save your changes

2. Tax Code Configuration Details

When modifying tax codes, pay attention to these crucial settings:

• Taxable Limit: Enter any jurisdiction-specific limits on tax amounts
• Short Description: Update if needed for tax detail printing on forms
• Calculate Sales Tax on Retention: Enable if tax should be calculated on invoice amounts less retention

Advanced Tax Settings

Tax on Tax Calculations

For jurisdictions requiring compound tax calculations:

1. Select the Tax on Tax checkbox
2. Enter the appropriate tax class in the Tax Class field
3. Note that this is the only location where you can enter a "tax on tax" class

Purchase Tax Settings

For purchase-related tax modifications:

1. Select the Purchases checkbox if applicable
2. Enter the Nonrecoverable percentage if needed

• Use 0 for posting all tax to AP Sales Tax account
• Use 100 for posting all tax to Nonrecoverable account

Tax Schedules Configuration

Creating New Tax Schedules

1. Navigate to Library Master > Setup > Sales Tax Schedule Maintenance
2. Enter a schedule code and description
3. Add relevant tax codes in the correct sequence

Schedule Sequence Importance

The order of tax codes in a schedule is crucial because:

1. It determines the calculation sequence for compound taxes
2. The first tax code becomes the primary code
3. Primary codes are used for calculating taxable amounts and updating tax history

Verification and Testing

System Validation

After making tax rate changes:

1. Create a test invoice
2. Verify the new tax calculations
3. Check tax reports for accuracy
4. Confirm the changes in the GL posting accounts

Troubleshooting Common Issues

If tax calculations appear incorrect, verify:

1. Sales Tax Class is properly selected in Tax Code Maintenance
2. Tax Rates are entered correctly
3. Tax Schedule contains the appropriate codes

Best Practices

Timing Considerations

When implementing tax rate changes:

1. Schedule changes during non-peak business hours
2. Coordinate with accounting periods
3. Document all modifications for audit purposes

Data Backup

Before making any tax rate changes:

1. Create a complete system backup
2. Document current tax settings
3. Test the backup to ensure it's viable

Integration Considerations

Automated Tax Solutions

For businesses using Avalara integration:

1. Configure AvaTax connect options through Library Master > Setup
2. Verify account credentials and license key
3. Ensure proper URL configuration for development or production environments

Multi-Location Businesses

For companies operating in multiple jurisdictions:

1. Maintain separate tax codes for each jurisdiction
2. Create appropriate tax schedules for each location
3. Verify tax rates against current jurisdiction requirements

Maintenance and Compliance

Regular Review Process

Establish a routine for:

1. Reviewing tax rates for accuracy
2. Updating rates based on jurisdiction changes
3. Validating tax calculations across different transaction types

Documentation Requirements

Maintain records of:

1. Tax rate changes
2. Implementation dates
3. Approval processes
4. Testing results

Correcting Tax Errors

If you discover incorrect tax applications:

1. Create an AR Credit Memo
2. Enter the original taxable amount
3. Apply negative offsetting entries
4. Verify tax liability reports

System Requirements

To ensure smooth tax rate modifications:

1. Verify user permissions
2. Check system version compatibility
3. Confirm database backup capabilities

Training and Support

User Education

Ensure relevant staff members:

1. Understand tax rate change procedures
2. Can verify tax calculations
3. Know how to report discrepancies

Technical Support

Maintain contact information for:

1. Internal IT support
2. Sage 100 support services
3. Tax advisors or consultants

Conclusion

Changing sales tax rates in Sage 100 requires attention to detail and a systematic approach. Following these comprehensive steps ensures accurate tax calculations and maintains compliance with tax regulations. Regular monitoring and verification of tax calculations after making changes will help maintain the integrity of your financial records and reporting.

Remember to always consult with tax professionals regarding specific rate changes and requirements for your jurisdiction, as tax laws and regulations can be complex and subject to change.

Citations: [1] https://www.acutedata.com/sage-100-set-sales-tax/ [2] https://4acc.com/article/how-to-set-up-or-change-sales-tax-codes-in-sage-100c/ [3] https://www.dsdinc.com/software/add-ons/avalara-sales-tax-automation/install-configure-sage-100-erp-sales-tax-avalara/ [4] https://www.dwdtechgroup.com/sage-100-mas-90-200/learn-the-steps-to-correct-sales-tax-in-sage-100/ [5] https://www.acutedata.com/sage-100-sales-tax-not-calculated-correctly-sales-order-accounts-receivable/ [6] https://help.sbc.sage.com/en-us/start/settings/create-and-manage-sales-tax-rates.html