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Custom tax rules, codes, attributes, and how to use them

It’s possible to create custom rules, codes, and attributes in Global Tax Determination if the standard rules don’t meet your business needs.

Using any of the features mentioned in this article requires a complex knowledge of the software and could compromise your standard tax settings. If you think you need to create a custom rule or code, ask for help from Customer Service or Professional Services. They can check if there are existing standard rules that can you can use and help create custom ones if needed without jeopardizing your setup.

Custom tax rules

If you have a special tax rate or fee for certain products in only a few jurisdictions, you can create a custom tax rule that will apply this special rate to a certain product or products in specific jurisdictions only. Check with Customer Service or Professional Services to see if the rate you're looking for already exists in Global Tax Determination.

Custom tax rules are marked with an asterisk (*) in Global Tax Determination.

Custom Good/Service Codes

Custom Good/Service Codes are usually used in 2 cases:

  1. You have a product for which Sovos hasn’t created a standard Good/Service Code yet.
  2. You disagree with the tax rules associated with an existing Good/Service Code.

Check with Professional Services before creating a custom code as it's possible that the Good/Service Code you need is already in the works and will be soon released.

Custom Entity/Use Codes

Global Tax Determination allows you to create custom Entity/Use Codes or modify the tax rules associated with an Entity/Use Code. However, this is not recommended because:

  • Global Tax Determination uses Entity/Use Codes to determine the correct rates and to assign tax amounts to the correct lines on returns
  • Tax rules associated with Entity/Use Codes are kept up-to-date with information from current tax laws
  • Entity/Use Codes provide a useful audit trail

If you decide to create a custom Entity/Use Code, ask for help from Customer Service or Professional Services.

Custom attributes

Global Tax Determination collects three types of information to calculate tax by default:  

  • Product/service
  • Location
  • Who's buying the product or service and what they're using it for

If you want GTD to collect more information about a transaction, you can create a custom attribute. For example, if you need to differentiate a job number within a transaction because that specific type of job is eligible for an exemption, you can create a Job Number custom attribute. Once the custom attribute is ready, custom attribute-based tax rules can be created and associated with specific tax jurisdictions and organizations.

Data Editor

Using the Data Editor will have the same effect as modifying your ERP’s settings without having to make those modifications in the ERP itself. You can use the Data Editor to change the input you’re passing into Global Tax Determination or refine the output messages; however, you can’t change tax rules or tax rates.

There are 3 common ways to use the Data Editor:

If your ERP doesn’t have certain fields that are needed in Global Tax Determination for accurate tax rate determination

You can assign the required value to an existing field in the Data Editor with the help of the input rule. For example, if you only have ShipTo and ShipFrom fields in your ERP but the Location of Order Approval is necessary to determine the most accurate tax rate, you can equate the ShipFrom field with the Location of Order Approval in the Data Editor.

If a message with specific content needs to be sent to your ERP about how a certain transaction was handled in Global Tax Determination

You can create an output rule to trigger a message to your ERP if certain conditions are satisfied. For example, if a message needs to be returned to the ERP stating that no sales tax is applied when the transaction involves a sale of raw materials to a customer in North Carolina, you can create this rule in the Data Editor.

If you need to break out one line item into several line items and allocate each of them a tax rate based on a specific rule

The allocation rule in the Data Editor lets you create rules to split one line item of a transaction into several ones and assign them individual tax rates. Let's say you need to allocate the purchase of a software license across the three states where it's used. You can create an allocation rule in the Data Editor that assigns a percentage of the total gross amount to each of the three locations where the software license is used. Global Tax Determination can then calculate the taxes due by applying each location’s tax rule to that location’s percentage of the total gross amount.

Overriding tax rules on discounts and freight-related costs

Global Tax Determination has default tax rules that decide if discounts and costs related to shipping and handling should be subtracted from the taxable amount in a specific taxing jurisdiction or not. You can override these decisions if necessary.